<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 20, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S -1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TICKETMASTER GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 7999 36-3597489
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3701 WILSHIRE BOULEVARD, 7TH FLOOR
LOS ANGELES, CALIFORNIA 90010
(213) 381-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
NED S. GOLDSTEIN, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
TICKETMASTER GROUP, INC.
3701 WILSHIRE BOULEVARD, 7TH FLOOR
LOS ANGELES, CALIFORNIA 90010
(213) 381-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS, INCLUDING COMMUNICATIONS
SENT TO AGENT FOR SERVICE, SHOULD BE SENT TO:
<TABLE>
<S> <C>
CHARLES EVANS GERBER, ESQ. TIMOTHY E. PETERSON, ESQ.
NORMAN J. GANTZ, ESQ. FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
NEAL, GERBER & EISENBERG ONE NEW YORK PLAZA
TWO NORTH LASALLE STREET NEW YORK, NY 10004
CHICAGO, ILLINOIS 60602 (212) 859-8000
(312) 269-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------0--------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, no par value...................... $115,000,000 $39,655.17
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 20, 1996
PROSPECTUS
SHARES
[LOGO]
TICKETMASTER GROUP, INC.
COMMON STOCK
All of the shares of common stock, no par value (the "Common Stock"),
offered hereby (the "Offering") are being sold by Ticketmaster Group, Inc.
("Ticketmaster" or the "Company"). Following the Offering, the Company's
directors, principal shareholders and certain of their affiliates will own
beneficially approximately % of the outstanding shares of Common Stock. See
"Principal Shareholders." Prior to the Offering, there has been no public market
for the Common Stock. It is currently estimated that the initial public offering
price is expected to be between $ and $ per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price.
The Company has applied for quotation of the Common Stock on The Nasdaq
Stock Market under the symbol , subject to official notice of issuance.
------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 9 HEREOF.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
UNDERWRITING DISCOUNT PROCEEDS TO
PRICE TO PUBLIC AND COMMISSION(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............................. $ $ $
- ------------------------------------------------------------------------------------------------------
Total(3)............................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the Underwriters a 30-day option to purchase up to
additional shares of Common Stock on the same terms and conditions
as set forth above, solely to cover over-allotments, if any. See
"Underwriting." If all such shares are purchased, the total Price to Public,
Underwriting Discount and Commission, and Proceeds to Company will be
$ , $ and $ , respectively.
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the certificates for the Common Stock will be made at
the offices of Allen & Company Incorporated, 711 Fifth Avenue, New York, New
York 10022, on or about , 1996.
------------------------
ALLEN & COMPANY
INCORPORATED
LAZARD FRERES & CO. LLC
SMITH BARNEY INC.
The date of this Prospectus is , 1996.
<PAGE> 3
[PHOTOGRAPHS TO BE
PROVIDED BY AMENDMENT]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Company intends to furnish its shareholders with annual reports
containing financial statements audited by an independent certified public
accounting firm and quarterly reports for the first three quarters of each
fiscal year containing unaudited interim financial information.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and consolidated financial
statements (the "Consolidated Financial Statements") included elsewhere in this
Prospectus. As used in this Prospectus, references to a "fiscal" year refer to
the 12-month period ending on January 31 of each year (e.g., "fiscal 1996" shall
mean the Company's fiscal year ended January 31, 1996). Unless otherwise
indicated, all information contained in this Prospectus assumes that (i) the
Underwriters' over-allotment option has not been exercised, (ii) any outstanding
options to purchase shares of Common Stock have not been exercised, (iii) any
outstanding shares of preferred stock convertible into shares of Common Stock
have not been converted and (iv) any outstanding notes exchangeable for shares
of Common Stock have not been exchanged. In addition, all share amounts and per
share data in this Prospectus reflect a 1-for-3 reverse stock split to be
effected prior to the effective date of the Offering. Unless the context
otherwise requires, references to "Ticketmaster" or the "Company" include
Ticketmaster Group, Inc., its predecessors and its subsidiaries. References to
the "Managed Businesses" include the Company's wholly and majority owned
subsidiaries (the "Consolidated Businesses") together with the Company's
interest in those unconsolidated joint ventures in which it acts as managing
partner (the "Unconsolidated Joint Ventures").
THE COMPANY
Ticketmaster is the leading provider of automated ticketing services in the
U.S. with over 3,500 clients, including many of the country's foremost
entertainment facilities and promoters and 73 professional sports franchises.
The Company has established its market position by providing these clients with
comprehensive ticket inventory control and management, a broad distribution
network and dedicated marketing and support services. Ticket orders are received
and fulfilled through operator-staffed call centers and independent sales
outlets remote to the facility box office. Revenue is generated principally from
convenience charges received by the Company for tickets sold on its clients'
behalf. The Company generally serves as an exclusive agent for its clients and
typically has no financial risk for unsold tickets. The Company, through the
Managed Businesses (the Consolidated Businesses together with the Unconsolidated
Joint Ventures), sold 53.1 million tickets in fiscal 1996 and 30.4 million
tickets during the first six months of fiscal 1997, while generating revenues of
$241.3 million and $146.2 million, respectively, for those periods.
The Company believes that its principal business, live entertainment
ticketing, will experience growth as a result of increased revenues under
existing venue contracts and increased general interest in and attendance at
live entertainment events. The Company believes that significant opportunities
exist through continued penetration of this principal market. Additionally, the
Company believes that further ticketing opportunities will arise from the
construction of new and larger facilities, the increase in the number of
professional sports teams and the development of new sports leagues.
Furthermore, the Company plans to continue to broaden its client base to include
such venues as museums, zoos, amusement parks, state and county fairs and other
locations such as golf courses, ski resorts and trade shows.
The Company also believes that significant opportunities exist
internationally to attract additional venues in a historically under-penetrated
market for ticketing services. In addition, the continued enthusiasm for soccer
and growing popularity of major American sports such as football, baseball and
basketball should lead to increased utilization of these international venues
and provide additional revenue opportunities. In order to be in a position to
capitalize on these trends, the Company expects to expand its existing
operations in the U.K., Australia and, through a new joint venture, in Mexico,
and is exploring further opportunities in Europe, the Pacific Rim and Central
and South America.
The Company is continuing to leverage its widely recognized brand name and
extensive distribution capabilities by developing new opportunities in related
areas, such as entertainment information and publishing, merchandising,
advertising, promotional services and direct marketing. Specific examples of its
efforts include offering integrated brand management and marketing services to
strategic partners, such as MasterCard International and Sprint Communications,
through sponsorship advertising opportunities during live events, during
telephone ticketing services, on its ticket stock and envelopes, on event
promotional
3
<PAGE> 5
material and in additional media outlets which the Company is developing. In
addition, the Company recently launched Live!, a monthly entertainment magazine
and event guide which the Company believes is a natural extension of its
existing distribution channels. The Company has also recently launched
Ticketmaster Online (http://www.ticketmaster.com), its site on the World Wide
Web designed to promote ticket sales for live events, disseminate event
information and ultimately offer transactional and merchandising services. These
efforts to create new promotional, marketing and distribution opportunities by
utilizing and integrating the Company's traditional principal ticketing services
and brand name have formed the basis for new growth opportunities in the future.
The Company believes that its proprietary inventory control management and
ticketing system (the "Ticketmaster System") and its extensive distribution
capabilities provide a competitive advantage that enhances the Company's ability
to attract new clients and maintain its existing client base. The Ticketmaster
System, which includes both hardware and software, is typically installed in a
client's facility box office and provides a single centralized inventory control
management system capable of tracking total ticket inventory for all events,
whether sales are made on a season, subscription, group or individual ticket
basis. The Ticketmaster System is capable of processing over 100,000 tickets per
hour in certain markets.
Through its Managed Businesses, Ticketmaster has a comprehensive domestic
distribution system that includes approximately 2,800 remote sales outlets in 44
states covering many of the major metropolitan areas in the U.S. and 17 call
centers with approximately 1,750 operator positions. The Company provides the
public with convenient access to tickets and information regarding entertainment
events. Ticket purchasers are assessed a convenience charge for each ticket sold
by the Company on behalf of its clients. These charges are negotiated and
included in the Company's contracts with its clients. The versatility of the
Ticketmaster System allows it to be customized to satisfy a full range of client
requirements.
From fiscal 1991 through fiscal 1996, the number of tickets sold and
revenues for the Managed Businesses have grown from 29.1 million tickets and
$96.1 million of revenues to 53.1 million tickets and $241.3 million of
revenues, a compounded annual growth rate of 13% and 20%, respectively.
BUSINESS STRATEGY
Ticketmaster believes that future growth will be derived principally from
the following:
- Continued penetration of its principal ticketing market in the U.S. and
expansion of both its live entertainment ticketing services and sales of
its automated general admission ticketing and concession sales/control
systems by broadening its client base to include such venues as museums,
zoos, amusement parks, state and county fairs, golf courses, ski resorts
and trade shows.
- International expansion of its live entertainment ticketing services and
sales of its automated general admission ticketing and concession
sales/control systems in Europe (including the U.K.), Australia, Canada,
Mexico, Central America and South America.
- Leveraging of its existing assets, including its brand name, fulfillment
capabilities, distribution network and user base, by offering integrated
brand management and expanded marketing services through both traditional
and new media for the benefit of its strategic partners and clients by:
actively pursuing marketing and joint promotion agreements with third
parties, similar to its recent agreements with MasterCard International
and Sprint Communications;
expanding the offerings on the Company's Web site, Ticketmaster Online,
and continuing to explore opportunities on the Internet;
increasing subscription levels, advertising pages and related revenues
of the recently launched Live! magazine;
creating promotional and merchandising business opportunities through
membership programs, including the development of a co-branded
Ticketmaster credit card; and
4
<PAGE> 6
accessing its customer database to create direct marketing programs.
In furtherance of its growth strategy, the Company has recently begun to
acquire, by purchase, redemption or otherwise, certain of the rights to use the
Company's name and the Ticketmaster System that had been previously granted to
licensees and the remaining interests in certain joint ventures. See
"Business -- Joint Ventures and Licensees."
The Company was organized in 1988 as a corporation under the laws of the
State of Illinois. The principal executive office of the Company is located at
3701 Wilshire Boulevard, 7th Floor, Los Angeles, California 90010, and the
telephone number at that address is (213) 381-2000.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered(1).............. shares(1)
Common Stock to be outstanding after
the Offering....................... shares(1)(2)
Use of proceeds...................... The Company intends to use the net proceeds of the
Offering (i) to repay outstanding indebtedness
(estimated to be $20.8 million) incurred or to be
incurred to acquire various interests not already
owned by the Company in certain of its operating joint
ventures and licensees; (ii) to repay a portion of the
outstanding indebtedness (estimated to be $60.0
million) under the Company's credit agreement (the
"Credit Agreement"); and (iii) for general corporate
purposes. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations
-Liquidity and Capital Resources" and "Description of
Certain Indebtedness."
Proposed Nasdaq Stock Market
symbol.............................
</TABLE>
- ---------------
(1) Does not include up to shares of Common Stock subject to the
over-allotment option granted to the Underwriters. See "Underwriting."
(2) Does not include 1,331,340 shares of Common Stock reserved for future
issuance pursuant to an option granted to Fredric D. Rosen, the Company's
President and Chief Executive Officer (the "Rosen Option"), and 3,250,000
shares of Common Stock reserved for future issuance under the Ticketmaster
Stock Plan (the "Stock Plan") of which 390,111 shares will be issuable upon
exercise of options granted at the effective time of the Offering. See
"Management -- Employment Agreements" and "Management -- Stock Plan." Also,
does not include shares of Common Stock issuable in connection with the
Company's acquisition of its joint venture partner's 50% interest in the
European Joint Venture (as defined herein), acquired in June 1996, and
Ticketmaster-Indiana, expected to close prior to the consummation of the
Offering, which, assuming an initial public offering price of $ per
share, would have totaled shares of Common Stock. See "Business -- Joint
Ventures and Licensees."
RISK FACTORS
INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER "RISK
FACTORS" COMMENCING ON PAGE 9 BEFORE PURCHASING SHARES OF COMMON STOCK.
5
<PAGE> 7
SUMMARY FINANCIAL DATA
HISTORICAL AND PRO FORMA
The following table sets forth summary consolidated financial data of the
Company and summary combined financial data of the Unconsolidated Joint
Ventures, consisting of the Unconsolidated Ticketing Joint Ventures (as defined
herein) and the Pacer/CATS/CCS Joint Venture (as defined herein), for the years
ended January 31, 1994, 1995 and 1996 and for the six months ended July 31, 1995
and 1996. The summary financial data for the three years ended January 31, 1996
presented below was derived from the Company's Consolidated Financial
Statements, the Unconsolidated Ticketing Joint Ventures' Financial Statements
and the Pacer/CATS/CCS Joint Venture's Financial Statements, all of which were
audited by KPMG Peat Marwick LLP, independent auditors, whose reports with
respect thereto, together with such financial statements, appear elsewhere
herein. The summary financial data presented below as of and for the six months
ended July 31, 1995 and 1996 and as of July 31, 1996 is unaudited. In the
opinion of the management of the Company, the unaudited financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial information included herein. Results
for the interim periods are not necessarily indicative of results to be expected
during the remainder of the current fiscal year or for any future period.
The following table also includes certain unaudited pro forma financial
information for the fiscal year ended January 31, 1996 and for the six months
ended July 31, 1996 which gives effect to the following as if each transaction
had occurred as of February 1, 1995 for statement of operations purposes and as
of July 31, 1996 for balance sheet purposes: (i) the formation of the Australian
Joint Ventures (as defined herein), which occurred in December 1995, in which
the Company acquired a 50% interest, (ii) the 100% acquisition of license rights
and related assets of the Company's Nashville, Tennessee licensee, which
occurred in February 1996, (iii) the acquisition of its joint venture partners'
50% interests in the European Joint Venture and the Pacer/CATS/CCS Joint
Venture, which occurred in June and July of 1996, respectively, (iv) the
proposed acquisition of its joint venture partner's 50% interest in
Ticketmaster-Indiana and the proposed acquisitions of the license rights and
related assets of the Company's Delaware Valley (Philadelphia) licensee and a
50% interest in its Mexico licensee (all of such proposed acquisitions being
subject to signed letters of intent and collectively referred to herein as the
"Pending Transactions") and (v) the sale by the Company of shares of
Common Stock offered hereby and application of proceeds therefrom as described
in Notes to Pro Forma Financial Information. See "Pro Forma Financial
Information." Such pro forma financial information is not necessarily indicative
of actual results that would have been achieved and is not indicative of future
results. The information set forth below should be read in conjunction with
"Selected Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and related Notes thereto appearing elsewhere in this Prospectus.
The Company's Managed Businesses are comprised of the Consolidated
Businesses together with the Unconsolidated Joint Ventures. The Company believes
that a meaningful measure of its operating results, in addition to those of the
Company on a historical consolidated basis, is a period to period comparison of
the results of the Company's Managed Businesses. Accordingly, certain additional
operating data which the Company believes is helpful to obtain a better
understanding of historical performance is discussed in terms of the Company's
attributable beneficial interest in (i.e., its pro rata share of the results of)
the Managed Businesses, regardless of whether or not fully consolidated. Through
the acquisition of the other joint venture partner's 50% interest in the
European Joint Venture, the acquisition of the other joint venture partner's 50%
interest in the Pacer/CATS/CCS Joint Venture and the acquisition of third party
interests in certain of the Company's other joint ventures and licensees as
described above, which will occur prior to the closing of the Offering (see
"Business -- Joint Ventures and Licensees"), the Consolidated Businesses will
constitute approximately 90% of revenues of the Managed Businesses on a pro
forma basis for the year ended January 31, 1996.
6
<PAGE> 8
SUMMARY FINANCIAL DATA
HISTORICAL AND PRO FORMA
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY PRO FORMA
FISCAL YEAR ENDED JANUARY 31, 31, ------------------------------------
--------------------------------- --------------------- FISCAL YEAR ENDED SIX MONTHS ENDED
1994 1995 1996 1995 1996 JANUARY 31, 1996 JULY 31, 1996
--------- --------- --------- --------- --------- ----------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
CONSOLIDATED BUSINESSES(1)
REVENUES:
Ticketing operations.......... $ 140,341 $ 175,140 $ 150,879 $ 79,756 $ 89,275 $ 187,625 $ 109,194
Concession and control
systems..................... -- -- -- -- -- 22,985 12,964
Publications.................. 4,575 4,640 4,198 1,766 4,512 5,697 4,688
Sponsorship & promotion....... 1,724 1,849 3,972 955 4,777 4,461 4,954
Other......................... -- 1,321 2,201 1,255 1,395 2,201 1,395
----------- ----------- ----------- ---------- ---------- ----------- ----------
Total....................... 146,640 182,950 161,250 83,732 99,959 222,969 133,195
----------- ----------- ----------- ---------- ---------- ----------- ----------
OPERATING COSTS AND EXPENSES:
Ticketing operations.......... 117,020 141,612 124,895 65,114 74,933 151,915 88,757
Concession and control
systems..................... -- -- -- -- -- 25,746 13,149
Publications.................. 2,297 2,908 9,129 3,368 9,115 10,176 10,162
Other......................... 11,738 22,444 16,649 7,940 9,622 16,649 9,622
Depreciation and
amortization................ 9,399 13,301 9,325 4,763 4,929 16,057 7,997
Equity in net (income) of
unconsolidated
affiliates.................. (1,577) (1,360) (1,458) (1,345) (2,136) (2,622) (1,632)
----------- ----------- ----------- ---------- ---------- ----------- ----------
Operating income............... 7,763 4,045 2,710 3,892 3,496 5,048 5,140
Interest expense, net......... 3,211 12,409 12,782 6,528 5,917 9,336 4,176
Net income (loss).............. 40 (6,678) (8,095) (2,327) (2,418) (2,736) (503)
UNCONSOLIDATED JOINT
VENTURES(2)
REVENUES:
Ticketing operations.......... $ 39,457 $ 46,921 $ 54,178 $ 27,530 $ 32,708 $ 23,106 $ 16,531
Publications.................. 1,599 2,129 1,939 1,009 176 787 --
Sponsorship & promotion....... 756 865 951 515 387 463 210
Concession and control
systems..................... -- 19,354 22,985 10,755 12,964 -- --
----------- ----------- ----------- ---------- ---------- ----------- ----------
Total....................... 41,812 69,269 80,053 39,809 46,235 24,356 16,741
----------- ----------- ----------- ---------- ---------- ----------- ----------
OPERATING COSTS AND EXPENSES:
Ticketing operations.......... 32,033 37,302 40,068 20,285 24,402 17,936 12,452
Publications.................. 1,108 1,261 1,148 611 128 102 102
Concession and control
systems..................... -- 20,932 25,746 11,995 13,149 -- --
Depreciation and
amortization................ 4,826 5,062 4,401 2,219 2,587 1,386 1,262
----------- ----------- ----------- ---------- ---------- ----------- ----------
Operating income............... 3,845 4,712 8,690 4,699 5,969 4,932 2,925
Interest expense, net......... 107 580 942 436 356 (99) (90)
Net income..................... 3,738 3,632 7,443 4,197 5,364 5,031 3,015
Ticketmaster's share of net
income........................ $ 1,577 $ 1,360 $ 1,458 $ 1,345 $ 2,136 $ 2,622 $ 1,632
</TABLE>
<TABLE>
<CAPTION>
AS OF JULY 31, 1996
------------------------------------
ACTUAL PRO FORMA
----------------- ----------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
CONSOLIDATED BUSINESSES(1)
Total assets.............................................................................. $ 147,174 $ 213,422
Total debt................................................................................ 183,606 118,606
Shareholders' equity (deficiency)......................................................... (110,268) 13,732
UNCONSOLIDATED JOINT VENTURES(2)
Total assets.............................................................................. $ 44,273 $ 23,092
Total debt................................................................................ 7,618 111
Venturers' capital........................................................................ 9,946 10,232
</TABLE>
Footnotes on following page
7
<PAGE> 9
SUMMARY FINANCIAL DATA
HISTORICAL AND PRO FORMA
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED PRO FORMA
FISCAL YEAR ENDED JANUARY 31, JULY 31, ------------------------------------
--------------------------------- ------------------- FISCAL YEAR ENDED SIX MONTHS ENDED
1994 1995 1996 1995 1996 JANUARY 31, 1996 JULY 31, 1996
--------- --------- --------- -------- -------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL INFORMATION:
(UNAUDITED)
NUMBER OF TICKETS SOLD:
Consolidated Businesses(1)...... 38,655 42,458 37,619 19,630 21,580 48,144 26,866
Unconsolidated Joint
Ventures(2)................... 12,194 13,156 15,497 7,546 8,823 6,469 4,446
---------- ---------- ---------- -------- -------- ---------- ----------
Managed Businesses.............. 50,849 55,614 53,116 27,176 30,403 54,613 31,312
========== ========== ========== ======== ======== ========== ==========
GROSS DOLLAR VALUE OF TICKET
SALES:
Consolidated Businesses(1)...... $1,001,098 $1,308,310 $1,116,660 $571,210 $619,806 $1,389,801 $ 767,456
Unconsolidated Joint
Ventures(2)................... 282,274 345,491 414,918 202,145 250,188 183,718 127,977
---------- ---------- ---------- -------- -------- ---------- ----------
Managed Businesses.............. $1,283,372 $1,653,801 $1,531,578 $773,355 $869,994 $1,573,519 $ 895,433
========== ========== ========== ======== ======== ========== ==========
TOTAL REVENUES:
Consolidated Businesses(1)...... $ 146,640 $ 182,950 $ 161,250 $ 83,732 $ 99,959 $ 222,969 $ 133,195
Unconsolidated Joint
Ventures(2)................... 41,812 69,269 80,053 39,809 46,235 24,356 11,406
---------- ---------- ---------- -------- -------- ---------- ----------
Managed Businesses.............. $ 188,452 $ 252,219 $ 241,303 $123,541 $146,194 $ 247,325 $ 144,601
========== ========== ========== ======== ======== ========== ==========
EBITDA(3):
Consolidated Businesses(1)...... $ 15,585 $ 15,986 $ 10,577 $ 7,310 $ 6,289 $ 18,483 $ 11,505
Unconsolidated Joint
Ventures(2)................... 8,671 9,774 13,091 6,918 8,556 6,318 4,187
---------- ---------- ---------- -------- -------- ---------- ----------
Managed Businesses.............. $ 24,256 $ 25,760 $ 23,668 $ 14,228 $ 14,845 $ 24,801 $ 15,692
========== ========== ========== ======== ======== ========== ==========
ATTRIBUTABLE EBITDA(4)........... $ 18,235 $ 20,442 $ 15,436 $ 10,949 $ 9,544 $ 22,919 $ 13,874
========== ========== ========== ======== ======== ========== ==========
</TABLE>
- ---------------
(1) Defined as results of operations from businesses included in the Company's
Consolidated Financial Statements included elsewhere in this Prospectus,
which include the accounts of the Company, its wholly owned subsidiaries
and majority (80% or greater) owned companies and joint ventures.
Investments in companies and joint ventures, in which ownership ranges from
33 1/3%-50% and in which the Company exercises significant influence over
operating and financial policies, are accounted for using the equity
method.
(2) Defined as the combined results of operations from Unconsolidated Ticketing
Joint Ventures and Pacer/CATS/CCS Joint Venture, the individual financial
statements of which are included elsewhere in this Prospectus.
Ticketmaster's ownership interests in these businesses range from
33 1/3%-50% and are in companies and joint ventures in which Ticketmaster
exercises significant influence over operating and financial policies, and
are accounted for under the equity method included in the Consolidated
Businesses.
(3) Defined as revenue less operating costs before interest, depreciation and
amortization, and taxes. Managed Business EBITDA does not represent cash
flows from operations, as defined by generally accepted accounting
principles, and should not be considered to be an alternative to net income
as an indicator of operations performance or to cash flows from operations
as a measure of liquidity.
(4) Defined as Ticketmaster's pro rata share in the results of its Consolidated
Businesses and Unconsolidated Joint Ventures' revenue less operating costs
before interest, depreciation and amortization, and taxes, "EBITDA." EBITDA
does not represent cash flows from operations, as defined by generally
accepted accounting principles, and should not be considered to be an
alternative to net income as an indicator of operating performance or to
cash flows from operations as a measure of liquidity.
Footnotes from preceding page
8
<PAGE> 10
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of Common Stock.
High Leverage. As a result of its growth and cash distributions to
shareholders, the Company has incurred significant amounts of debt and is highly
leveraged. As of July 31, 1996, the Company had consolidated long-term debt of
$183.6 million. On a pro forma basis after giving effect to the sale of Common
Stock in the Offering and the application of the net proceeds therefrom, the
Company would have had, as of July 31, 1996, consolidated long-term debt of
$118.6 million. See "Capitalization." The Company may incur additional
indebtedness, including borrowings under credit facilities, in the future,
subject to certain limitations contained in its debt instruments. See
"Description of Certain Indebtedness." The Company's ability to satisfy the
financial obligations under its indebtedness outstanding from time to time will
depend upon its future operating performance, which is subject to certain
prevailing economic conditions, levels of interest rates and financial, business
and other factors, many of which are beyond the Company's control. There can be
no assurance that the Company's operating cash flow will be sufficient to cover
its debt service obligations. The Company's current and future debt service
obligations could have important consequences to holders of Common Stock,
including the following: (i) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, general
corporate purposes or other purposes may be impaired; (ii) a substantial portion
of the Company's cash flow from operations must be dedicated to the payment of
interest on its indebtedness; (iii) the Company's high degree of leverage may
make it more vulnerable to economic downturns; and (iv) a portion of the
Company's borrowings is at variable interest rates, subject to prescribed
limits.
Dependence on Entertainment, Sporting and Leisure Events. Pursuant to
contracts with arenas, stadiums, theaters and other facilities, sports teams,
promoters and others, the Company, in its capacity as agent, sells tickets
relating to entertainment, sporting and leisure events and, accordingly, the
Company's ticketing business is directly affected by the popularity, frequency
and location of such events. Factors affecting such events, including general
economic conditions, consumer trends and work stoppages (such as the 1994 strike
by the Major League Baseball Players Association against major league baseball),
could have a material adverse effect on the Company.
Quarterly Fluctuations in Revenues. The Company has historically
experienced quarterly fluctuations in ticket operation revenues, which vary
depending upon the dates when tickets for events are released for sale by its
clients. The scheduling of popular events has generally been more concentrated
during the warm weather months. This factor, together with the general practice
of commencing ticket sales several months prior to the event date, tends to
result in higher revenues in the Company's first six months of operations during
each fiscal year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Seasonality and Quarterly Results."
Dependence upon President and Chief Executive Officer. The Company is
dependent to a large extent on the services of Fredric D. Rosen, its President
and Chief Executive Officer. Loss of the services of Mr. Rosen could have a
material adverse effect on the Company's business and operations. The Company
and Mr. Rosen have entered into an employment agreement with an initial term
ending on January 31, 1999, subject to various termination rights. See
"Management -- Employment Agreements."
Control by Existing Owners. Upon completion of the Offering, Paul G. Allen
will beneficially own approximately % of the then-outstanding shares of Common
Stock. Under Illinois law, Mr. Allen will effectively have control of the
Company and will have sufficient voting power to determine the composition of
the Board of Directors or the outcome of any matter submitted to shareholders
for approval. Under Illinois law, Mr. Allen also will be permitted to take
action by written consent without holding a shareholders' meeting to provide the
Company's other shareholders with the opportunity to consider and vote upon the
matters to be acted upon by the shareholders. See "Principal Shareholders" and
"Description of Capital Stock."
Failure to Close Pending Transactions. The Company has entered into letters
of intent to acquire, by purchase, redemption or otherwise, the interest of
certain joint venturers and licensees. See "Business -- Joint Ventures and
Licensees." However, the completion of these transactions remains subject to
certain conditions. If any of such conditions are not satisfied with respect to
any of the Pending Transactions, the Company may
9
<PAGE> 11
be unable to complete such transactions. If the Company is unable, for any
reason, to complete any of the Pending Transactions, the Company will be unable
to include those Pending Transactions in its consolidated financial statements
and may be unable to directly access the operating income and related cash flows
attributable to the interests to be acquired in the Pending Transactions. See
"-- High Leverage." No assurances can be given that any of such transactions
will be completed.
Changing Technology; Absence of Patent Protection. The automated ticketing
business is dependent upon the efficiencies created by the computer hardware and
software utilized by each service provider, such as the Company. The automated
ticketing industry is characterized by continual enhancement to existing
technology to improve these efficiencies and provide additional capabilities.
The Company, with its research and development staff, continues to improve the
Ticketmaster System. The failure of the Company to develop or have access to
current technology could adversely affect the Company's competitive position.
The Company presently has no patents pertaining to its products. The
technology used by the Company in its products is likely to be within the state
of the art and may not be more advanced than the technology used by or available
to certain of its competitors and potential competitors. The Company may be
unable to prevent its competitors and others from incorporating features of the
Company's products into their own products. See "Business -- Trademarks and
Patents."
New Ventures. The Company plans to continue to leverage its brand name and
extensive distribution capabilities to develop businesses in related areas.
Certain of these initiatives have entailed and other initiatives may entail
substantial start-up costs. There can be no assurance that the Company will be
successful in these endeavors. See "Business -- Strategy and Growth
Opportunities."
International Operations. The Company presently conducts business in the
U.K. and conducts business in Canada and Mexico through licensees and in
Australia through joint ventures. In fiscal 1996, revenues from international
operations accounted for 6.2% of total revenues of the Managed Businesses. The
Company intends to continue to expand its operations outside of the U.S. and to
enter additional markets, which will require additional resources. International
operations are generally subject to various risks not present in domestic
operations. Various foreign jurisdictions have laws limiting the right and
ability of foreign subsidiaries to pay dividends and remit earnings to
affiliated companies unless specified conditions are met. Risks exist with
respect to foreign currency fluctuations and difficulties in staffing and
managing international operations. As the Company continues to expand its
international operations, exposures to gains and losses on foreign currency
transactions may increase. See "Business -- Strategy and Growth Opportunities"
and "Business -- Joint Ventures and Licensees."
Competition. The automated ticketing business is highly competitive, and
the Company faces competition, and potential competition, from numerous parties
offering similar services. In addition to competitors which perform services
similar to the Company on behalf of third parties, existing technology makes it
possible for individual facilities and promoters, or groups of facilities and
promoters, to operate their own automated ticketing systems. See "Risk
Factors -- Changing Technology; Absence of Patent Protection,"
"Business -- Client Relationships" and "Business -- Competition."
Government Investigations and Litigation. Federal, state and local
authorities have from time to time commenced investigations or inquiries with
respect to the Company's compliance with antitrust, unfair business practice and
other laws. The most recent federal investigation was commenced in 1994 by the
Antitrust Division of the United States Department of Justice and was concluded
in 1995 with no enforcement action being taken against the Company.
During 1994, the Company was also named as a defendant in multiple class
action lawsuits alleging that the Company's activities violated federal
antitrust laws. All of such federal lawsuits were consolidated by the Judicial
Panel on Multidistrict Litigation for pretrial proceedings. After an amended and
consolidated complaint was filed by the plaintiffs, the Company filed a motion
to dismiss and, on May 31, 1996, the United States District Court for the
Eastern District of Missouri granted the motion to dismiss for failure to state
a claim upon which relief could be granted. On June 12, 1996, plaintiffs
appealed the court's dismissal of such lawsuits.
The Company is also named as a defendant in a lawsuit filed by Moviefone,
Inc. and The Teleticketing Company, L.P. Plaintiffs allege that the Company has
violated antitrust laws and has tortiously interfered with contractual and
prospective business relationships. The Company has denied the allegations and
intends to vigorously defend such lawsuit.
The Company believes that it has conducted its business in substantial
compliance with all applicable laws. However, given the status of the foregoing
matters, no assurances can be given as to the effect that they may have
10
<PAGE> 12
on the Company. The Company has incurred significant legal expenses in
connection with these investigations and lawsuits and will likely incur
additional significant legal expenses in the future should similar
investigations or additional lawsuits be instituted. See "Business -- Government
Investigations and Litigation."
Risk of Business Interruption. The Company's operations are dependent upon
its ability to protect its call centers, computer and telecommunications
equipment and software systems against damage from fire, power loss,
telecommunications interruption or failure, natural disaster and other similar
events. In the event that the Company experiences a temporary or permanent
interruption at one or more of its call centers through casualty, equipment
malfunction or otherwise, the Company's business could be adversely affected.
While the Company maintains secondary and tertiary backup facilities as well as
property and business interruption insurance, such facilities and insurance may
not adequately protect the Company or compensate the Company for all losses that
it may incur.
Shares Eligible for Future Sale. A substantial number of shares of Common
Stock will become available for sale in the public market at prescribed times
following the effective date of the Offering. No predictions can be made as to
the effect, if any, that market sales of such shares, or the availability of
such shares for future sales, will have upon the market price of shares of
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock (including shares issued upon the exercise of stock options or
pursuant to convertible preferred stock or exchangeable notes), or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock and could impair the Company's future ability to
raise capital through an offering of its equity securities. The directors,
officers and shareholders of the Company have agreed that, without the written
consent of Allen & Company Incorporated on behalf of the Underwriters, they will
not offer to sell, contract to sell or otherwise sell or dispose of their shares
of Common Stock for a period of 180 days after the date of this Prospectus,
except for certain stock repurchases that may be required pursuant to employment
agreements. Persons who may receive shares of Common Stock in connection with
certain of the completed and proposed acquisitions have also agreed to be bound
by similar restrictions. At any time following the expiration or termination of
such period, certain of the existing shareholders will have the right, pursuant
to existing agreements, to require the Company, subject to certain
qualifications, to effect the registration under the Securities Act of 1933, as
amended (the "Securities Act"), of all or a specified number of their shares of
Common Stock.
The Common Stock offered hereby will be freely tradeable (other than by an
"affiliate" of the Company as such term is defined in the Securities Act)
without restriction or registration under the Securities Act. All remaining
outstanding shares of Common Stock may be sold under Rule 144 or Regulation S
promulgated under the Securities Act, subject to the holding period, volume,
manner of sale and other restrictions of Rule 144 or Regulation S and subject to
the 180-day lock-up agreements with the Underwriters. See "Shares Eligible for
Future Sale," "Underwriting," "Management -- Employment Agreements" and "Certain
Transactions."
Absence of Prior Public Market. Prior to the Offering, there has been no
public market for the Common Stock of the Company. Consequently, the initial
public offering price will be determined by negotiations between the Company and
the Representatives of the Underwriters. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
There can be no assurance that an active trading market will develop after the
Offering or, if developed, that such a market will be sustained. Further, the
trading price of the Common Stock may be highly volatile. The market price for
shares of Common Stock may be significantly affected by such factors as
quarter-to-quarter variations in the Company's results of operations or changes
in general economic, industry or market conditions.
Dilution. Purchasers of the shares of Common Stock offered hereby will
incur immediate and substantial dilution in the net tangible book value of their
investment. See "Dilution."
Dividends. The Company does not anticipate paying any cash dividends on its
Common Stock in the foreseeable future. Furthermore, the Credit Agreement
imposes restrictions and limitations on the payment of dividends to the
Company's shareholders. See "Dividend Policy" and "Description of Certain
Indebtedness."
Forward-Looking Statements and Associated Risks. This Prospectus contains
forward-looking statements, including statements regarding, among other items,
(i) the Company's growth strategies; (ii) anticipated trends in the Company's
business; and (iii) the Company's future liquidity requirements and capital
resources. These forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties, certain of
which are beyond the Company's control. Actual results could differ materially
from those anticipated by these forward-looking statements as a result of
various factors including the risks set forth in this section. In light of these
risks and uncertainties, there can be no assurance that events anticipated by
the forward-looking statements contained in this Prospectus will in fact
transpire.
11
<PAGE> 13
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
pursuant to the Offering, after deducting expenses payable by the Company in
connection with the Offering, are estimated to be approximately $92.0 million
(approximately $105.8 million if the Underwriters' over-allotment option is
exercised in full) based on an assumed initial public offering price of
$ per share, which is the mid-point of the range of the initial public
offering price set forth on the cover page of the Prospectus. The Company
intends to use such proceeds, in the indicated approximate amounts, for the
following purposes (dollars in millions):
<TABLE>
<S> <C>
Repayment of outstanding indebtedness incurred or to be incurred to
acquire various interests not already owned by the Company in
certain of its operating joint ventures and licensees.............. $20.8
Repayment of a portion of the outstanding indebtedness under the
Credit Agreement................................................... 60.0
General corporate purposes........................................... 11.2
-----
--
Total...................................................... $92.0
=====
</TABLE>
Any proceeds from the exercise of the Underwriters' over-allotment option will
be used for general corporate purposes, including the further repayment of a
portion of the outstanding indebtedness under the Credit Agreement. For
information relative to the indebtedness to be repaid using the net proceeds of
the Offering (including interest rates and maturities), see "Description of
Certain Indebtedness." See also "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
DIVIDEND POLICY
Since November 17, 1993, the Company has not declared or paid any dividends
upon its Common Stock. The Company presently intends to retain earnings during
the foreseeable future for general corporate purposes, including business
expansion and capital expenditures. The declaration and payment of future
dividends will be at the sole discretion of the Board of Directors and will
depend on the Company's profitability, financial condition, capital needs,
future prospects and other factors deemed relevant by the Board of Directors.
Furthermore, the Credit Agreement imposes restrictions and limitations on
the making of dividends and distributions to the Company's shareholders.
Accordingly, the future ability of the Company to declare and pay dividends on
its Common Stock will be limited by virtue of the restrictions under the Credit
Agreement. See "Description of Certain Indebtedness."
In addition, the separate credit agreement pertaining to the Company's
Pacer/CATS/CCS operations restricts the ability of that entity to transfer funds
to the Company in the form of cash dividends, loans or advances. See
"Description of Certain Indebtedness."
12
<PAGE> 14
DILUTION
At July 31, 1996, on a pro forma basis to reflect the Pending Transactions,
the Company had net tangible book value (deficiency) of $(83.3) million, or
$(5.44) per share. After giving effect to the sale of the shares of Common Stock
offered in the Offering (at an assumed initial public offering price of
$ per share), and the application of the estimated net proceeds
therefrom as described in "Use of Proceeds," the pro forma net tangible book
value of the Company at July 31, 1996 would have been approximately $13.7
million, or $( ) per share of Common Stock. This represents an
immediate decrease in such net tangible book value (deficiency) of $
per share to existing shareholders and an immediate dilution of $ per
share to purchasers of shares of Common Stock in the Offering. Dilution per
share is determined by subtracting the pro forma net tangible book value
(deficiency) per share of Common Stock after completion of the Offering from the
per share price paid by purchasers of Common Stock in the Offering. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............................. $ (1)
Pro forma net tangible book value (deficiency) per share as of July
31, 1996........................................................ $
Decrease in net tangible book value (deficiency) per share
attributable to the Offering....................................
------
Adjusted pro forma net tangible book value (deficiency) per share after the
Offering...................................................................
------
Dilution per share to purchasers of Common Stock in the Offering............. $
======
</TABLE>
The following table sets forth as of July 31, 1996 (calculated on the same
basis as set forth in the preceding paragraph) the number of shares of Common
Stock purchased from the Company, the total consideration paid and the average
price per share paid by the existing shareholders of the Company and the number
of shares of Common Stock to be purchased from the Company, the total
consideration to be paid and the average price per share to be paid by
purchasers of the Common Stock pursuant to the Offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders(2)..... % $ % $
New investors(2)............. % % (1)
--------- ----- ---------- -----
Total.............. 100.0% $ 100.0%
========= ===== ========== =====
</TABLE>
- ---------------
(1) Before deduction of estimated underwriting discounts and expenses to be paid
by the Company.
(2) The computations in the tables above (i) assume the over-allotment option
granted to the Underwriters has not been exercised, (ii) exclude shares of
Common Stock reserved for issuance pursuant to the Rosen Option and options
which have been and may be granted under the Stock Plan or otherwise, (iii)
exclude shares of Common Stock reserved for issuance pursuant to any
convertible preferred stock or exchangeable note and (iv) reflect a 1-for-3
reverse stock split to be effected prior to the effective date of the
Offering. To the extent options are exercised, preferred stock is converted
or exchangeable notes are exchanged, there may be further dilution to
investors. See "Capitalization" and "Management."
13
<PAGE> 15
CAPITALIZATION
The following table sets forth as of July 31, 1996: (i) the actual
capitalization of the Company, including the current portion of long-term debt
and capitalized lease obligations, (ii) the pro forma capitalization of the
Company after giving effect to the Pending Transactions and (iii) the pro forma,
as adjusted, capitalization of the Company after giving effect to the receipt of
net proceeds from the sale of the shares of Common Stock pursuant to
the Offering and application thereof, the 1-for-3 reverse stock split to be
effected prior to the effectiveness of the Offering and the conversion of the
Company's Preferred Stock into Common Stock and the exchange of the Company's
Exchangeable Promissory Note into Common Stock:
<TABLE>
<CAPTION>
JULY 31, 1996
----------------------------------------
PRO FORMA
PRO FORMA FOR PENDING
FOR PENDING TRANSACTIONS,
ACTUAL TRANSACTIONS AS ADJUSTED
--------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt and capitalized lease
obligations.............................................. $ 205 $ 205 $ --
Long-term debt, net of current portion..................... $ 178,401 $ 199,201 $ 118,606
Exchangeable Promissory Note............................... 5,000 5,000 --
Stockholders' equity (deficiency):
Preferred Stock, no par value, 20,000,000 shares
authorized; no shares outstanding actual,
shares outstanding pro forma, no shares outstanding as
adjusted.............................................. -- 27,000 --
Common Stock, no par value, 80,000,000 shares authorized;
15,310,405 shares outstanding actual and pro forma;
shares outstanding as adjusted(1)..................... -- --
Additional paid-in capital................................. -- -- 124,000
Retained earnings (deficit)................................ (110,268) (110,268) (110,268)
---------- ---------- ------------
Total stockholders' equity (deficiency).................... (110,268) (83,268) 13,732
---------- ---------- ------------
Total capitalization............................. $ 73,338 $ 121,138 $ 132,338
========== ========== ============
</TABLE>
- ---------------
(1) Excludes 1,596,451 shares of Common Stock reserved for issuance upon
exercise of outstanding options and 2,984,889 shares reserved for future
option grants. See "Management -- Executive Compensation," "Management --
Stock Plan" and Note 14 of Notes to Consolidated Financial Statements.
14
<PAGE> 16
SELECTED FINANCIAL DATA
HISTORICAL AND PRO FORMA
The following table sets forth selected consolidated financial data of the
Company and summary combined financial data of the Unconsolidated Joint
Ventures, consisting of the Unconsolidated Ticketing Joint Ventures and the
Pacer/CATS/CCS Joint Venture, for the years ended January 31, 1992, 1993, 1994,
1995 and 1996 and for the six months ended July 31, 1995 and 1996. The selected
financial data as of January 31, 1995 and 1996 and for each of the years in the
three year period ended January 31, 1996 presented below was derived from the
Company's Consolidated Financial Statements, the Unconsolidated Ticketing Joint
Ventures' Financial Statements and the Pacer/CATS/CCS Joint Venture's Financial
Statements, all of which were audited by KPMG Peat Marwick LLP, independent
auditors, whose reports with respect thereto, together with such financial
statements, appear elsewhere herein. The selected financial data for each of the
years in the two-year period ended January 31, 1993 were derived from audited
financial statements of the Company not included herein. The selected financial
data presented below as of and for the six months ended July 31, 1995 and 1996
is unaudited. In the opinion of the management of the Company, the unaudited
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial information
included herein. Results for the interim periods are not necessarily indicative
of results to be expected during the remainder of the current fiscal year or for
any future period.
The following table also includes certain unaudited pro forma financial
information for the fiscal year ended January 31, 1996 and for the six months
ended July 31, 1996 which gives effect to the following as if each transaction
had occurred as of February 1, 1995 for statement of operations purposes and as
of July 31, 1996 for balance sheet purposes: (i) the formation of the Australian
Joint Ventures, which occurred in December 1995, in which the Company acquired a
50% interest, (ii) the 100% acquisition of license rights and related assets of
the Company's Nashville, Tennessee licensee, which occurred in February 1996,
(iii) the acquisition of its joint venture partners' 50% interests in the
European Joint Venture and the Pacer/CATS/CCS Joint Venture, which occurred in
June and July of 1996, respectively, (iv) the proposed acquisition of its joint
venture partner's 50% interest in Ticketmaster-Indiana and the proposed
acquisitions of the license rights and related assets of the Company's Delaware
Valley (Philadelphia) licensee and a 50% interest in its Mexico licensee (all of
such proposed acquisitions being subject to signed letters of intent) and (v)
the sale by the Company of shares of Common Stock offered hereby and
application of proceeds therefrom as described in Notes to Pro Forma Financial
Information. See "Pro Forma Financial Information." Such pro forma financial
information is not necessarily indicative of actual results that would have been
achieved and is not indicative of future results. The information set forth
below should be read in conjunction with "Summary Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related Notes thereto appearing
elsewhere in this Prospectus.
The Company's Managed Businesses are comprised of the Consolidated
Businesses together with the Unconsolidated Joint Ventures. The Company believes
that a meaningful measure of its operating results, in addition to those of the
Company on a historical consolidated basis, is a period to period comparison of
the results of the Company's Managed Businesses. Accordingly, certain additional
operating data which the Company believes is helpful to obtain a better
understanding of historical performance is discussed in terms of the Company's
attributable beneficial interest in (i.e., its pro rata share of the results of)
the Managed Businesses, regardless of whether or not fully consolidated. Through
the acquisition of the other joint venture partner's 50% interest in the
European Joint Venture, the acquisition of the other joint venture partner's 50%
interest in the Pacer/CATS/CCS Joint Venture and the acquisition of third party
interests in certain of the Company's other joint ventures and licensees as
described above, which will occur prior to the closing of the Offering (see
"Business -- Joint Ventures and Licensees"), the Consolidated Businesses will
constitute approximately 90% of revenues of the Managed Businesses on a pro
forma basis for the year ended January 31, 1996.
15
<PAGE> 17
SELECTED FINANCIAL DATA
HISTORICAL AND PRO FORMA
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SIX MONTHS ------------------------
ENDED FISCAL YEAR SIX MONTHS
FISCAL YEAR ENDED JANUARY 31, JULY 31, ENDED ENDED
---------------------------------------------------- ------------------- JANUARY 31, JULY 31,
1992 1993 1994 1995 1996 1995 1996 1996 1996
-------- -------- -------- -------- -------- -------- -------- ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
CONSOLIDATED BUSINESSES(1)
REVENUES:
Ticketing operations.... $106,533 $129,937 $140,341 $175,140 $150,879 $ 79,756 $ 89,275 $ 187,625 $109,194
Concession and control
systems............... -- -- -- -- -- -- -- 22,985 12,964
Publications............ 2,990 2,793 4,575 4,640 4,198 1,766 4,512 5,697 4,688
Sponsorship and
promotion............. 1,525 2,075 1,724 1,849 3,972 955 4,777 4,461 4,954
Other................... -- -- -- 1,321 2,201 1,255 1,395 2,201 1,395
-------- -------- -------- -------- -------- -------- -------- ---------- --------
Total................... 111,048 134,805 146,640 182,950 161,250 83,732 99,959 222,969 133,195
-------- -------- -------- -------- -------- -------- -------- ---------- --------
OPERATING COSTS AND
EXPENSES:
Ticketing operations.... 89,732 107,444 117,020 141,612 124,895 65,114 74,933 151,915 88,757
Concession and control
systems............... -- -- -- -- -- -- -- 25,746 13,149
Publications............ 1,196 1,117 2,297 2,908 9,129 3,368 9,115 10,176 10,162
Sponsorship and
promotion............. -- -- -- -- -- -- -- -- --
Other................... 3,344 3,331 11,738 22,444 16,649 7,940 9,622 16,649 9,622
Depreciation and
amortization.......... 9,299 9,398 9,399 13,301 9,325 4,763 4,929 16,057 7,997
Equity in net (income)
of unconsolidated
affiliates............ (1,746) (1,061) (1,577) (1,360) (1,458) (1,345) (2,136) (2,622) (1,632)
-------- -------- -------- -------- -------- -------- -------- ---------- --------
Operating income.......... 9,223 14,576 7,763 4,045 2,710 3,892 3,496 5,048 5,140
Interest expense, net... 1,872 1,311 3,211 12,409 12,782 6,528 5,917 9,336 4,176
Net income (loss)......... $ 4,037 $ 7,501 $ 40 $ (6,678) $ (8,095) $ (2,327) $ (2,418) $ (2,736) $ 503
Net income (loss) per
share................... $ 1.34 $ 2.48 $ .01 $ (.44) $ (.53) $ (.15) $ (.16) -- --
UNCONSOLIDATED JOINT
VENTURES(2)
REVENUES:
Ticketing operations.... $ 24,254 $ 34,050 $ 39,457 $ 46,921 $ 54,178 $ 27,530 $ 32,708 $ 23,106 $ 16,531
Publications............ 645 818 1,599 2,129 1,939 1,009 176 787 --
Sponsorship and
promotion............. 454 1,125 756 865 951 515 387 463 210
Concession and control
systems............... -- -- -- 19,354 22,985 10,755 12,964 -- --
-------- -------- -------- -------- -------- -------- -------- ---------- --------
Total................... 25,353 35,993 41,812 69,269 80,053 39,809 46,235 24,356 16,741
-------- -------- -------- -------- -------- -------- -------- ---------- --------
OPERATING COSTS AND
EXPENSES:
Ticketing operations.... 18,406 28,727 32,033 37,302 40,068 20,285 24,402 17,936 12,452
Publications............ 258 327 1,108 1,261 1,148 611 128 102 102
Sponsorship and
promotion............. -- -- -- -- -- -- -- -- --
Concession and control
systems............... -- -- -- 20,932 25,746 11,995 13,149 -- --
Depreciation and
amortization.......... 2,931 4,278 4,826 5,062 4,401 2,219 2,587 1,386 1,262
-------- -------- -------- -------- -------- -------- -------- ---------- --------
Operating income.......... 3,758 2,661 3,845 4,712 8,690 4,699 5,969 4,932 2,925
Interest expense, net... (39) 35 107 580 942 436 356 (99) (90)
Net income................ 3,797 2,625 3,738 3,632 7,443 4,197 5,364 5,031 3,015
Ticketmaster's share of
net income.............. $ 1,746 $ 1,061 $ 1,577 $ 1,360 $ 1,458 $ 1,345 $ 2,136 $ 2,622 $ 1,632
BALANCE SHEET DATA:
CONSOLIDATED BUSINESSES(1)
Total assets............ $ 75,369 $ 78,530 $ 90,424 $108,592 $105,397 $106,760 $147,174 -- $213,422
Total debt.............. 24,306 18,080 135,473 151,599 159,909 155,828 183,606 -- 118,606
Shareholders' equity
(deficiency).......... 20,831 22,084 (93,020) (99,698) (107,793) (102,025) (110,268) -- 13,732
UNCONSOLIDATED JOINT
VENTURES(2)
Total assets............ $ 17,070 $ 30,930 $ 28,514 $ 46,013 $ 56,927 $ 32,614 $ 44,273 -- $ 23,092
Total debt.............. -- 1,309 1,048 9,667 8,360 608 7,618 -- 111
Venturers' capital...... 9,814 14,153 12,760 11,006 13,118 10,563 9,946 -- 10,232
</TABLE>
Footnotes on Following Page
16
<PAGE> 18
SELECTED FINANCIAL DATA (CONTINUED)
HISTORICAL AND PRO FORMA
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
SIX MONTHS ------------------------
ENDED FISCAL YEAR SIX MONTHS
FISCAL YEAR ENDED JANUARY 31, JULY 31, ENDED ENDED
------------------------------------------------------------ ------------------- JANUARY 31, JULY 31,
1992 1993 1994 1995 1996 1995 1996 1996 1996
-------- ---------- ---------- ---------- ---------- -------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL
INFORMATION:
(UNAUDITED)
NUMBER OF TICKETS
SOLD:
Consolidated
Businesses(1)... 30,579 36,881 38,655 42,458 37,619 19,630 21,580 48,144 26,866
Unconsolidated
Joint
Ventures(2)..... 8,594 11,057 12,194 13,156 15,497 7,546 8,823 6,469 4,446
-------- ---------- ---------- ---------- ---------- -------- -------- ---------- --------
Managed
Businesses...... 39,173 47,938 50,849 55,614 53,116 27,176 30,403 54,613 31,312
======== ========== ========== ========== ========== ======== ======== ========== ========
GROSS DOLLAR VALUE
OF TICKET SALES:
Consolidated
Businesses(1)... $700,641 $ 898,121 $1,001,098 $1,308,310 $1,116,660 $571,210 $619,806 $1,389,801 $767,456
Unconsolidated
Joint
Ventures(2)..... 172,639 246,378 282,274 345,491 414,918 202,145 250,188 183,718 127,977
-------- ---------- ---------- ---------- ---------- -------- -------- ---------- --------
Managed
Businesses...... $873,280 $1,144,499 $1,283,372 $1,653,801 $1,531,578 $773,355 $869,994 $1,573,519 $895,433
======== ========== ========== ========== ========== ======== ======== ========== ========
TOTAL REVENUES:
Consolidated
Businesses(1)... $111,048 $ 134,805 $ 146,640 $ 182,950 $ 161,250 $ 83,732 $ 99,959 $ 222,969 $133,195
Unconsolidated
Joint
Ventures(2)..... 25,353 35,993 41,812 69,269 80,053 39,809 46,235 24,356 11,406
-------- ---------- ---------- ---------- ---------- -------- -------- ---------- --------
Managed
Businesses...... $136,401 $ 170,798 $ 188,452 $ 252,219 $ 241,303 $123,541 $146,194 $ 247,325 $144,601
======== ========== ========== ========== ========== ======== ======== ========== ========
EBITDA(3):
Consolidated
Businesses(1)... $ 16,776 $ 22,913 $ 15,585 $ 15,986 $ 10,577 $ 7,310 $ 6,289 $ 18,483 $ 11,505
Unconsolidated
Joint
Ventures(2)..... 6,689 6,939 8,671 9,774 13,091 6,918 8,556 6,318 4,187
-------- ---------- ---------- ---------- ---------- -------- -------- ---------- --------
Managed
Businesses...... $ 23,465 $ 29,852 $ 24,256 $ 25,760 $ 23,668 $ 14,228 $ 14,845 $ 24,801 $ 15,692
======== ========== ========== ========== ========== ======== ======== ========== ========
ATTRIBUTABLE
EBITDA(4)....... $ 18,656 $ 25,262 $ 18,235 $ 20,442 $ 15,436 $ 10,949 $ 9,544 $ 22,919 $ 13,874
CAPITAL
EXPENDITURES:
Consolidated
Businesses(1)... $ 5,779 $ 7,500 $ 3,072 $ 6,838 $ 3,644 $ 2,012 $ 3,260 $ 4,639 $ 4,690
Unconsolidated
Joint
Ventures(2)..... 1,994 1,148 1,138 1,522 1,644 614 1,303 696 742
-------- ---------- ---------- ---------- ---------- -------- -------- ---------- --------
Managed
Businesses...... $ 7,773 $ 8,648 $ 4,210 $ 8,360 $ 5,288 $ 2,626 $ 4,563 $ 5,335 $ 5,432
======== ========== ========== ========== ========== ======== ======== ========== ========
</TABLE>
- ---------------
(1) Defined as results of operations from businesses included in the Company's
Consolidated Financial Statements included elsewhere in this Prospectus,
which include the accounts of the Company, its wholly owned subsidiaries and
majority (80% or greater) owned companies and joint ventures. Investments in
companies and joint ventures, which ownership ranges from 33 1/3%-50% and in
which the Company exercises significant influence over operating and
financial policies, are accounted for using the equity method.
(2) Defined as the combined results of operations from Unconsolidated Ticketing
Joint Ventures and Pacer/CATS/CCS, the individual financial statements of
which are included elsewhere in this Prospectus. Ticketmaster's ownership
interest in these businesses range from 33 1/3%-50% and are companies and
joint ventures in which Ticketmaster exercises significant influence over
operating and financial policies, and are accounted for under the equity
method included in the Consolidated Businesses.
(3) Defined as revenue less operating costs before interest, depreciation and
amortization, and taxes. EBITDA does not represent cash flows from
operations, as defined by generally accepted accounting principles, and
should not be considered to be an alternative to net income as an indicator
of operations performance or to cash flows from operations as a measure of
liquidity.
(4) Defined as Ticketmaster's pro rata share in the results of the Consolidated
Businesses and of its Unconsolidated Joint Ventures' revenue less operating
costs before interest, depreciation and amortization, and taxes, "EBITDA."
EBITDA does not represent cash flows from operations, as defined by
generally accepted accounting principles, and should not be considered to be
an alternative to net income as an indicator of operating performance or to
cash flows from operations as a measure of liquidity.
Footnotes from preceding page
17
<PAGE> 19
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the "Pro Forma
Financial Information") is based on the historical financial statements of the
Company and has been prepared to illustrate the effects of the acquisitions
described below and the related financing transactions and the application of
the proceeds of the Offering as set forth under "Use of Proceeds." The Pro Forma
Financial Information does not purport to represent what the Company's financial
position and results of operations actually would have been if such transactions
had in fact occurred on such dates. The pro forma adjustments are based on
currently available information and upon certain assumptions that management
believes are reasonable under current circumstances. The Pro Forma Financial
Information and accompanying notes should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto, and other financial
information pertaining to the Company, the acquired businesses and businesses
proposed to be acquired included in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this Prospectus.
The pro forma combined balance sheet as of July 31, 1996 and the pro forma
combined statements of operations for the year ended January 31, 1996 and for
the six months ended July 31, 1996 give effect to the following as if each
transaction had occurred as of February 1, 1995 for statement of operations
purposes and as of July 31, 1996 for balance sheet purposes: (i) the formation
of the Australian Joint Ventures, which occurred in December 1995, in which the
Company acquired a 50% interest, (ii) the 100% acquisition of license rights and
related assets of the Company's Nashville, Tennessee licensee, which occurred in
February 1996, (iii) the acquisition of its joint venture partners' 50%
interests in the European Joint Venture and the Pacer/CATS/CCS Joint Venture,
which occurred in June and July of 1996, respectively, (iv) the proposed
acquisition of its joint venture partner's 50% interest in Ticketmaster-Indiana
and the proposed acquisitions of the license rights and related assets of the
Company's Delaware Valley (Philadelphia) licensee and a 50% interest in its
Mexico licensee (all of such proposed acquisitions being subject to signed
letters of intent) and (v) the sale by the Company of shares of Common
Stock offered hereby and application of proceeds therefrom.
The acquisitions will be accounted for using the purchase method of
accounting. The total purchase costs of the acquisitions will be allocated to
the tangible and intangible assets and liabilities acquired based upon their
respective fair values. The allocation of the aggregate purchase price reflected
in the Pro Forma Financial Information is preliminary; however, the final
allocation is not expected to differ materially from the preliminary allocation.
18
<PAGE> 20
TICKETMASTER GROUP, INC.
PRO FORMA BALANCE SHEET
(UNAUDITED)
JULY 31, 1996
(IN THOUSANDS)
ASSETS:
<TABLE>
<CAPTION>
TICKETMASTER PRO FORMA
CONSOLIDATED ACQUIRED PRO FORMA COMBINED
BUSINESSES BUSINESSES ADJUSTMENTS BALANCE SHEET
------------ ---------- ----------- -------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents..................... $ 47,093 $ 5,985 $ 92,000(1) $ 64,278
(20,800)(2)
(60,000)(3)
Account receivable, ticket sales.............. 10,785 1,760 12,545
Account receivable, other..................... 8,059 84 8,143
Inventory..................................... 4,454 4 4,458
Prepaid expenses.............................. 5,969 535 6,504
-------- ------- --------
Total current assets.................. 76,360 8,368 95,928
-------- ------- --------
OTHER ASSETS
Equipment and leasehold improvements, net..... 16,276 1,812 18,088
Investments in and advances to affiliated
entities................................... 8,334 347 (269)(4) 8,412
Cost in excess net of assets acquired......... 27,333 44,734(5) 72,067
Intangible and other assets, net.............. 13,401 56 13,457
Deferred income taxes, net.................... 5,470 5,470
-------- ------- --------
Total other assets.................... 70,814 2,215 117,493
-------- ------- --------
Total assets.......................... $ 147,174 $ 10,583 $ 213,422
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY):
CURRENT LIABILITIES
Current portion of long-term debt............. $ 205 $ $ (205)(3) $
Accounts payable, trade....................... 8,401 2,270 10,671
Accounts payable, clients..................... 36,024 3,239 39,263
Accrued expenses.............................. 13,500 1,340 14,840
Deferred income............................... 8,847 73 8,920
-------- ------- --------
Total current liabilities............. 66,977 6,922 73,694
-------- ------- --------
LONG-TERM LIABILITIES
Long-term debt, net of current portion........ 178,401 (59,795)(3) 118,606
Deferred rent and other....................... 5,963 326 6,289
Minority interests............................ 1,101 1,101
Exchangeable Promissory Note.................. 5,000 (5,000)(6)
SHAREHOLDERS' EQUITY (DEFICIENCY)
Preferred stock...............................
Common stock..................................
Additional paid in capital.................... 132,000(7) 124,000
(8,000)(8)
Accumulated earnings (deficit)................ (110,268) 3,335 (3,335)(8) (110,268)
-------- ------- --------
Total shareholders' equity
(deficiency)........................ (110,268) 3,335 13,732
-------- ------- --------
Total liabilities and shareholders'
equity.............................. $ 147,174 $ 10,583 $ 213,422
======== ======= ========
</TABLE>
19
<PAGE> 21
TICKETMASTER GROUP, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
FISCAL YEAR ENDED JANUARY 31, 1996
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
OTHER ACQUIRED PRO FORMA
TICKETMASTER ACQUIRED BUSINESSES -- COMBINED
CONSOLIDATED TICKETING PACER/ PRO FORMA STATEMENT OF
BUSINESSES BUSINESSES(15) CATS/CCS ADJUSTMENTS OPERATIONS
------------ -------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Ticketing operations........ $ 150,879 $ 37,681 $ $ (935)(9) $ 187,625
Concession control
systems.................. 22,985 22,985
Publications................ 4,198 1,499 5,697
Sponsorship & promotion..... 3,972 489 4,461
Merchandising............... 2,201 2,201
----------- ------- ------- -----------
161,250 39,669 22,985 222,969
----------- ------- ------- -----------
Operating costs, expenses and
other items:
Ticketing operations........ 97,147 20,289 117,436
Ticketing selling, general
and administrative....... 27,748 7,666 (935)(9) 34,479
Concession control systems
operations............... 18,844 18,844
Concession control systems
selling, general and
administrative........... 6,902 6,902
Publications................ 9,129 1,047 10,176
Merchandising............... 1,891 1,891
Corporate general and
administrative........... 14,758 14,758
----------- ------- ------- -----------
150,673 29,002 25,746 204,486
----------- ------- ------- -----------
Income (loss) before
other operating items,
interest and taxes..... 10,577 10,667 (2,761) 18,483
Depreciation and
amortization............. 9,325 2,250 956 3,526(10) 16,057
Equity in net (income) of
unconsolidated
affiliates............... (1,458) (157) (1,007)(11) (2,622)
----------- ------- ------- -----------
Operating income
(loss)............ 2,710 8,574 (3,717) 5,048
Other expenses:
Interest expense, net....... 12,782 69 985 (4,500)(12) 9,336
Minority interests.......... 273 273
----------- ------- ------- -----------
Income (loss) before
income taxes...... (10,345) 8,505 (4,702) (4,561)
Income tax provision
(benefit)................ (2,250) 305 120(13) (1,825)
----------- ------- ------- -----------
Net income (loss)... $ (8,095) $ 8,505 $ (5,007) $ (2,736)
=========== ======= ======= ===========
Net income (loss) per share... $ (0.53) $
=========== ===========
Weighted average number of
common shares outstanding... 15,310,405
=========== ===========
Supplemental Financial
Information:
Attributable EBITDA(14).......................................................... $ 22,919
===========
</TABLE>
20
<PAGE> 22
TICKETMASTER GROUP, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JULY 31, 1996
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
OTHER ACQUIRED PRO FORMA
TICKETMASTER ACQUIRED BUSINESSES -- COMBINED
CONSOLIDATED TICKETING PACER/ PRO FORMA STATEMENT OF
BUSINESSES BUSINESSES(15) CATS/CCS ADJUSTMENTS OPERATIONS
------------ -------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Ticketing operations........ $ 89,275 $ 20,176 $ $ (257)(9) $ 109,194
Concession control
systems.................. 12,964 12,964
Publications................ 4,512 176 4,688
Sponsorship & promotion..... 4,777 177 4,954
Merchandising............... 1,395 1,395
----------- ------- ------- -----------
99,959 20,529 12,964 133,195
----------- ------- ------- -----------
Operating costs, expenses and
other items:
Ticketing operations........ 58,655 10,751 (257)(9) 69,149
Ticketing selling,
administrative general
and...................... 16,278 3,330 19,608
Concession control systems
operations............... 10,133 10,133
Concession control systems
selling, general and
administrative........... 3,016 3,016
Publications................ 9,115 1,047 10,162
Merchandising............... 1,226 1,226
Corporate general and
administrative........... 8,396 8,396
----------- ------- ------- -----------
93,670 15,128 13,149 121,690
----------- ------- ------- -----------
Income (loss) before
other operating items,
interest and taxes..... 6,289 5,401 (185) 11,505
Depreciation and
amortization............. 4,929 875 504 1,688(10) 7,997
Equity in net loss (income)
of unconsolidated
affiliates............... (2,136) (57) 561(11) (1,632)
----------- ------- ------- -----------
Operating income
(loss)................. 3,496 4,583 (689) 5,140
Other expenses:
Interest expense, net....... 5,917 25 484 (2,250)(12) 4,176
Minority interests.......... 126 126
----------- ------- ------- -----------
Income (loss) before
income taxes........... (2,547) 4,558 (1,173) 838
Income tax provision
(benefit)................ (129) 464(13) 335
----------- ------- ------- -----------
Net income (loss)........ $ (2,418) $ 4,558 $ (1,173) $ 503
=========== ======= ======= ===========
Net income (loss) per share... $ (0.16) $
=========== ===========
Weighted average number of
common shares outstanding... 15,310,405
=========== ===========
Supplemental Financial
Information:
Attributable EBITDA(14).......................................................... $ 13,874
===========
</TABLE>
21
<PAGE> 23
NOTES TO PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(1) Represents the sale by the Company of shares of Common Stock
offered hereby resulting in net proceeds of approximately $92 million after
underwriting discount and commission and estimated offering expenses.
(2) Represents the purchase price to acquire a 100% interest in the Delaware
Valley (Philadelphia) licensee and a 50% joint venture interest in the
Mexico licensee.
(3) Represents the repayment of outstanding indebtedness under the Company's
bank credit facilities.
(4) Represents a net decrease in the Company's investments in
Ticketmaster-Indiana offset by an increase in the investment balance
resulting from the Company's completed acquisition of a 50% joint venture
interest in its Mexico licensee.
(5) Represents the purchase price in excess of net assets acquired in the
Ticketmaster-Indiana, Delaware Valley (Philadelphia) and Mexico
acquisitions.
(6) Represents an assumed exchange of debt issued as an exchangeable note
arising from the acquisition of a 50% interest in the European Joint
Venture through the issuance of shares of Common Stock in the
Company.
(7) Represents the increase in shareholders' equity as a result of
and shares of Common Stock issued in connection with the Offering
as described in Notes 1 and 6 above, and shares of Common Stock
issued in connection with the proposed acquisition of Ticketmaster-Indiana.
(8) Represents the reduction in equity related to expenses payable by the
Company in connection with the Offering and elimination of investment
balances in the equity of joint ventures as if they had been acquired and
consolidated by the Company.
(9) Reflects elimination of license fees earned by Ticketmaster and paid by
joint ventures and licensees in Mexico, Delaware Valley (Philadelphia), the
European Joint Venture, Nashville and the Australian Joint Ventures.
(10) Represents amortization arising from the excess purchase price paid for the
net assets of a joint venturer's 50% interest in the European Joint
Venture, a licensee's 100% interest in Nashville, Tennessee and also
includes amortization of the purchase price in excess of net assets arising
in the acquisition of a joint venture partner's 50% interest in
Ticketmaster-Indiana, a licensee's 100% interest in Delaware Valley
(Philadelphia) and a licensee's 50% interest in Mexico. This excess
purchase price is being amortized over a 15 year period.
(11) Represents the consolidation of income earned by Ticketmaster-Indiana and
the European Joint Venture, aggregating $3,709 in fiscal 1996 and $1,734
for the six months ended July 31, 1996, and losses incurred by the
Pacer/CATS/CCS Joint Venture, totaling $4,211 in fiscal 1996 and $1,173 for
the six months ended July 31, 1996, offset by an increase in equity for the
inclusion of the Australian Joint Ventures for the entire period.
(12) Represents the reduction of interest expense resulting from the repayment
of indebtedness under the Company's bank credit facilities ($4,500 and
$2,250 for fiscal 1996 and the six months ended July 31, 1996,
respectively), at approximate rates of interest incurred by the Company
during the respective periods, approximately 7.5%.
(13) Represents the related income tax effect of the pro forma adjustments
utilizing a statutory tax rate of 40%.
(14) Defined as Ticketmaster's pro rata share of its Consolidated Businesses and
Unconsolidated Joint Ventures' revenue less operating costs before
interest, depreciation and amortization, and taxes ("EBITDA"). EBITDA does
not represent cash flows from operations, as defined by generally accepted
accounting principles, and should not be considered to be an alternative to
net income as an indicator of operating performance or to cash flows from
operations as a measure of liquidity.
(15) Summary data for Ticketmaster-Indiana and Delaware Valley (Philadelphia),
which are acquisitions not yet completed as of September 20, 1996, included
in the acquired businesses columns is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
JANUARY 31, 1996 JULY 31, 1996
----------------- ----------------
<S> <C> <C>
Revenue..................................... $25,480 $ 13,582
Operating costs and expenses................ 17,159 9,428
Income before other operating items......... 8,322 4,153
Net income.................................. 7,494 3,745
</TABLE>
22
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Summary and
Selected Financial Data, Consolidated Financial Statements and related Notes
thereto and the Pro Forma Financial Information along with the other financial
information appearing elsewhere in this Prospectus. Unless otherwise noted,
references to a specific fiscal year are to the 12-month period ending on
January 31 of such year.
GENERAL
The Company's Managed Businesses are comprised of the Consolidated
Businesses together with the Unconsolidated Joint Ventures. The Company seeks to
optimize the performance of each of the Managed Businesses regardless of its
percentage ownership. The Company provides the same scope of ticket inventory
control and management, distribution and dedicated marketing and support
services to its joint ventures as it does to its wholly owned operating
subsidiaries. Consequently, certain aspects of the performance of the Managed
Businesses are better understood by measuring their performance as a whole
without regard to the Company's ownership interest. Where relevant, certain
aspects of the performance of the Managed Businesses are also discussed with
regard to the Consolidated Businesses and Unconsolidated Joint Ventures
separately.
The Company believes that a meaningful measure of its operating results, in
addition to those of the Company on a historical consolidated basis, is a period
to period comparison of the results of the Managed Businesses. Accordingly, in
order to obtain a better understanding of the factors affecting the Company's
performance, additional operating data is presented to show the Company's
attributable beneficial interest in (i.e., its pro rata share of the results of)
the Managed Businesses regardless of whether or not fully consolidated. Through
the acquisition of the remaining 50% joint venturer's interest in the European
Joint Venture, which was completed in June 1996, the acquisition of the
remaining 50% joint venturer's interest in the Pacer/CATS/CCS Joint Venture,
which was completed in July 1996, and the acquisition of third party interests
in certain of the Company's other joint ventures and licensees, which will occur
prior to the closing of the Offering (see "Business -- Joint Ventures and
Licensees"), the Consolidated Businesses will constitute approximately 90% of
revenues of the Managed Businesses on a pro forma basis for the year ended
January 31, 1996.
REVENUES
Historically, ticket operations revenues have accounted for approximately
95% of the Company's consolidated revenues. Ticket operation revenues are
primarily comprised of convenience charges which the Company generates by
providing clients with access to the Company's extensive distribution
capabilities including Company-owned call centers, an independent network of
sales outlets remote to the client's box office and non-traditional distribution
channels such as the Internet. Other components of ticket operations revenue
include handling fees attributed to the sale and distribution of tickets through
channels other than remote sales outlets, credit card fee reimbursements,
licensing fees and the sale of ticketing systems to
licensees and other third party users.
The Company generally contracts with each client to be its exclusive agent
for ticket distribution for a specified period, typically three to five years,
and has experienced a high contract renewal rate. In contracts with clients, the
Company is granted the right to collect from ticket purchasers a per ticket
convenience charge on all tickets sold by the Company and an additional per
order handling charge on those tickets sold by the Company at other than remote
sales outlets.
Fluctuations in ticket operation revenues occur largely as a result of
changes in the number of tickets sold and changes in the Company's average
revenue per ticket. The number of tickets sold by the Company can vary as a
result of (i) additions or deletions to the list of client facilities serviced
by the Company; (ii) fluctuations in the scheduling of events, particularly for
popular events; (iii) overall consumer demand for live entertainment events; and
(iv) the percentage of tickets for events which are sold directly by the
Company's clients and not through the Company's distribution system.
23
<PAGE> 25
The average revenue per ticket will vary as a result of the amount of
convenience charges earned on each ticket. The amount of the convenience charge
typically varies based upon numerous factors, including the type of event and
whether the ticket is purchased at a retail sales outlet or through call
centers, as well as the services to be rendered to the client, the amount and
cost of equipment to be installed at the client's facility and the amount of
advertising and/or promotional allowances to be provided by the Company.
Contracts with clients provide for scheduled increases in convenience charges
during the term of the contract.
The sale of tickets for an event often commences several months prior to
the date of the event. The Company recognizes ticket operation revenue when the
ticket is sold. If an event is likely to be canceled, a reserve is established
in the financial statements for potential convenience charge refunds. Except for
major league sports' work stoppages, the losses attributable to cancellations
have been very limited because most events are postponed and rescheduled rather
than cancelled.
The Company has generated revenue through the sale of subscriptions to the
Ticketmaster Entertainment Guides, which were produced and distributed by the
Company to provide the ticket buying public with regional information regarding
future live entertainment events. Significant growth in the number of
subscribers to the Entertainment Guide led, in part, to the creation of Live!
magazine, a monthly entertainment publication whose first edition was published
in February 1996. Each edition of Live! contains a supplemental regional
Entertainment Guide inserted for the reader's benefit. The first nine issues of
the magazine have had an aggregate of 259 pages of advertising.
In July 1994, the Company commenced operating Entertainment To Go (ETG), a
merchandising business designed to leverage the Company's inbound call center
traffic, its database of consumers and its relationships with the music and
entertainment industries to effectively upsell music, tour and entertainment
related merchandise products to consumers.
Additional revenues are generated through the development of integrated
marketing programs designed to provide a strategic partner with access to the
Company's extensive distribution capabilities and media assets such as Live!
magazine and Ticketmaster Online (a 75,000 page World Wide Web site). Additional
sponsorship and promotion opportunities exist through call center music on hold,
ticketbacks, inserts and ticket envelopes.
OPERATING COSTS
The Company records ticket operations costs specifically associated with
the distribution of tickets sold through its system. The largest components of
these operating costs are payroll, telecommunication charges, data communication
costs and commissions paid on tickets distributed through outlets away from the
box office, along with the clients' share of convenience charges, and other
expenses with lesser components including ticket stock and postage. These costs
are primarily variable in nature. Direct payroll costs relate to the Company's
call centers, which are located throughout the U.S., and in the U.K., Australia
and Mexico. Outlet commissions are paid to music chains, department stores and
other independent retail locations in exchange for their providing space and
personnel to service ticket purchases. The participation, if any, by clients in
the Company's revenues from convenience charges and other revenues is set forth
in the Company's contracts with its clients.
Costs associated with the production and fulfillment of Live! magazine
include production (paper and printing), editorial and distribution costs. These
costs are primarily variable in nature and fluctuate based upon the number of
copies produced and the number of pages in each edition.
The costs recorded by the Company for its merchandising operations are
directly related to the procurement of products which are ultimately sold and
distributed to consumers. The Company acquires its products through licensees of
major touring acts and other copyright owners and does not generally invest in
or hold inventory prior to sale; consequently, operations are designed to
quickly access product inventory to fulfill orders.
Because many operating expenses such as those attributable to technology
support, sales and marketing, human resources management and other
administrative functions are not allocable to specific businesses, they
24
<PAGE> 26
are recorded as corporate general and administrative expenses. These cost
characteristics of maintaining the Company's Consolidated Businesses differ from
the cost characteristics of the Unconsolidated Joint Ventures; consequently,
Consolidated Businesses have higher costs of services as a percentage of revenue
than Unconsolidated Joint Ventures.
OTHER
Although the Company collects ticket receipts, representing the full ticket
sales price, on behalf of its clients, it only records as revenue the
convenience charges and handling fees included in the ticket sales price. The
remainder of the ticket sales price constitutes funds being held on behalf of
clients, which the Company is obligated to remit to its clients at times
specified by contracts with each client. As a result, a significant portion of
the Company's cash, accounts receivable and accounts payable relates to funds
received and held on behalf of clients. Accounts payable primarily represent the
ticket proceeds payable to its clients, which are paid according to the terms
specified in each contract, typically weekly. Accounts receivable primarily
represent the portion of ticket proceeds, including the convenience charges, due
the Company from its independent outlets and from credit card companies. The
Company's contracts with outlets set forth payment terms, generally ranging from
daily to weekly, which together with other collection procedures virtually
eliminate losses from these receivables.
25
<PAGE> 27
RESULTS OF OPERATIONS
The following tables set forth operating results for the Managed Businesses
showing the results of the Consolidated Businesses and the Unconsolidated Joint
Ventures as a percentage of total revenues. The percentages shown for the
Unconsolidated Joint Ventures represent the full balance for each line item and
are not reduced by the joint venture ownership interests held by entities other
than the Company.
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED JANUARY ENDED
31, JULY 31,
------------------------- ---------------
1994 1995 1996 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
I. CONSOLIDATED BUSINESSES:
Revenue:
Ticketing operations........................... 95.7% 95.7% 93.5% 95.3% 89.3%
Publications................................... 3.1 2.6 2.6 2.1 4.5
Sponsorship & promotion........................ 1.2 1.0 2.5 1.1 4.8
Merchandising.................................. 0.0 0.7 1.4 1.5 1.4
----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Operating costs, expenses and other items:
Ticketing operations........................... 60.1 61.6 60.2 61.4 58.7
Ticketing selling, general and
administrative............................... 19.7 15.8 17.2 16.4 16.3
Publications................................... 1.6 1.6 5.7 4.0 9.1
Merchandising.................................. 0.0 0.7 1.2 1.3 1.2
Corporate general and administrative........... 8.0 7.5 9.2 8.2 8.4
Write-off of in process research and
development.................................. 0.0 4.1 0.0 0.0 0.0
----- ----- ----- ----- -----
89.4 91.3 93.5 91.3 93.7
----- ----- ----- ----- -----
Income before other operating items, interest
and taxes.................................... 10.6 8.7 6.5 8.7 6.3
Depreciation, amortization and other........... 6.4 7.3 5.8 5.7 4.9
Equity in income of unconsolidated
affiliates................................... (1.1) (0.7) (0.9) (1.6) (2.1)
----- ----- ----- ----- -----
Operating income............................... 5.3 2.1 1.6 4.6 3.5
Interest expense and other........................ 2.7 7.3 8.1 8.1 6.0
----- ----- ----- ----- -----
Income (loss) before income taxes.............. 2.6 (5.2) (6.5) (3.5) (2.5)
Income tax provision (benefit).................... 2.6 (1.5) (1.4) (0.7) (0.1)
----- ----- ----- ----- -----
Net income (loss).............................. 0.0% (3.7)% (5.1)% (2.8)% (2.4)%
===== ===== ===== ===== =====
II. UNCONSOLIDATED JOINT VENTURES:
Revenue:
Ticketing operations........................... 94.4% 67.7% 67.7% 69.2% 70.7%
Publications................................... 3.8 3.1 2.4 2.5 0.4
Sponsorship & promotion........................ 1.8 1.3 1.2 1.3 0.8
Concession control systems .................... 0.0 27.9 28.7 27.0 28.1
----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Operating costs, expenses and other items:
Ticketing operations........................... 54.6 40.7 38.5 39.3 39.7
Ticketing selling, general and
administrative............................... 22.0 13.1 11.5 11.6 13.1
Publications................................... 2.6 1.8 1.4 1.5 0.3
Concession control systems operations.......... 0.0 17.6 19.9 18.2 18.3
Concession control systems selling, general and
administrative............................... 0.0 12.7 12.3 11.9 10.1
----- ----- ----- ----- -----
79.2 85.9 83.6 82.5 81.5
----- ----- ----- ----- -----
Income before other operating items, interest
and taxes................................. 20.8 14.1 16.4 17.5 18.5
Depreciation and amortization.................. 11.5 7.3 5.5 5.6 5.6
----- ----- ----- ----- -----
Operating income............................. 9.3 6.8 10.9 11.9 12.9
Interest expense and other........................ 0.3 0.8 1.2 1.1 0.8
----- ----- ----- ----- -----
Loss before income tax (benefit)............. 9.0 6.0 9.7 10.8 12.1
Income tax benefit................................ 0.0 0.7 0.4 0.2 0.5
----- ----- ----- ----- -----
Net loss..................................... 9.0% 5.3% 9.3% 10.6% 11.6%
===== ===== ===== ===== =====
</TABLE>
26
<PAGE> 28
SIX MONTHS ENDED JULY 31, 1996 COMPARED WITH SIX MONTHS ENDED JULY 31, 1995
The following tables set forth unaudited operating results for the
Consolidated Businesses and the Unconsolidated Joint Ventures, collectively, the
Managed Businesses. The amounts shown for the Unconsolidated Joint Ventures
represent the full balance for each line item and do not give effect to the
joint venture ownership interests held by entities other than the Company.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31, 1995 SIX MONTHS ENDED JULY 31, 1996
------------------------------------------ ------------------------------------------
CONSOLIDATED UNCONSOLIDATED MANAGED CONSOLIDATED UNCONSOLIDATED MANAGED
BUSINESSES JOINT VENTURES BUSINESSES BUSINESSES JOINT VENTURES BUSINESSES
------------ -------------- ---------- ------------ -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Ticketing operations....... $ 79,756 $ 27,530 $ 107,286 $ 89,275 $ 32,708 $ 121,983
Concession control
systems................. -- 10,755 10,755 -- 12,964 12,964
Publications............... 1,766 1,009 2,775 4,512 176 4,688
Sponsorship & promotion.... 955 515 1,470 4,777 387 5,164
Merchandising.............. 1,255 -- 1,255 1,395 -- 1,395
------- ------- -------- ------- ------- --------
83,732 39,809 123,541 99,959 46,235 146,194
------- ------- -------- ------- ------- --------
Operating costs, expenses and
other items:
Ticketing operations....... 51,383 15,652 67,035 58,655 18,344 76,999
Ticketing selling, general
and administrative...... 13,731 4,633 18,364 16,278 6,058 22,336
Concession control systems
operations.............. -- 7,246 7,246 -- 8,462 8,462
Concession control systems
selling, general and
administrative.......... -- 4,749 4,749 -- 4,687 4,687
Publications............... 3,368 611 3,979 9,115 128 9,243
Merchandising.............. 1,066 -- 1,066 1,226 -- 1,226
Corporate general and
administrative.......... 6,874 -- 6,874 8,396 -- 8,396
------- ------- -------- ------- ------- --------
76,422 32,891 109,313 93,670 37,679 131,349
------- ------- -------- ------- ------- --------
Income before other operating
items, interest and
taxes...................... 7,310 6,918 $ 14,228 6,289 8,556 $ 14,845
======== ========
Depreciation and
amortization............ 4,763 2,219 4,929 2,587
Equity in net income of
unconsolidated
affiliates.............. (1,345) -- (2,136) --
------- ------- ------- -------
Operating income............. 3,892 4,699 3,496 5,969
Interest expense and other... 6,809 436 6,043 356
Income tax provision
(benefit).................. (590) 66 (129) 249
------- ------- ------- -------
Net (loss) income............ $ (2,327) $ 4,197 $ (2,418) $ 5,364
======= ======= ======= =======
</TABLE>
CONSOLIDATED BUSINESSES
Ticketing operations revenues increased by $9.5 million, or 12%, to $89.3
million for the first six months of fiscal 1997 from $79.8 million for the first
six months of fiscal 1996. The increase is attributed to an increase of 10% in
the number of tickets sold (from 19.6 million to 21.6 million tickets). The
increase in the number of tickets sold resulted from the acquisition of a joint
venturer's interest in (and subsequent consolidation of) the European Joint
Venture, an increase in popular music activity, an increase in ticket sales of
Major League Baseball and the National Hockey League as compared to the first
six months of fiscal 1996 when these leagues were experiencing the residual
effects of work stoppages, sales attributable to new clients including a
27
<PAGE> 29
number of Major League Soccer teams and the acquisition of the Company's
Nashville licensee in February 1996.
Publications revenues increased by $2.7 million, or 155%, to $4.5 million
for the first six months of fiscal 1997 from $1.8 million for the first six
months of fiscal 1996. The increase is attributed to Ticketmaster Publications'
launch of Live! magazine, a monthly entertainment magazine, which distributed
its first issue in February 1996. Live! was created as an extension of the
Entertainment Guide which was published and distributed without significant
advertising revenue by the Company during fiscal 1996. Since the February 1996
launch of Live!, the subscription base has remained relatively constant, with
the increase in revenues arising from increases in annual subscription rates and
advertising.
Sponsorship & promotions revenues increased by $3.8 million, or 400%, to
$4.8 million for the first six months of fiscal 1997 from $1.0 million for the
first six months of fiscal 1996. The increase is primarily attributed to an
increase in sponsorship and promotion activity with strategic marketing partners
resulting from the Company's efforts to create integrated marketing
opportunities around live events, its call centers, ticket stock and envelopes,
event promotional material and in additional media outlets such as Ticketmaster
Online and Ticketmaster Travel.
Ticketing operations costs increased by $7.3 million, or 14%, to $58.7
million for the first six months of fiscal 1997 from $51.4 million for the first
six months of fiscal 1996. As a percentage of ticketing operations revenues,
these expenses increased from 64% to 66%, which was primarily attributed to
increased costs resulting from the development of Ticketmaster Online and
Ticketmaster Travel.
Ticketing selling, general and administrative costs increased by $2.6
million, or 19%, to $16.3 million for the first six months of fiscal 1997 from
$13.7 million for the first six months of fiscal 1996. The increase is largely
attributed to the development of Ticketmaster Online and Ticketmaster Travel and
promotional activity with strategic marketing partners in the Company's efforts
to develop additional integrated marketing opportunities around live events.
Publications costs increased by $5.7 million, or 171%, to $9.1 million for
the first six months of fiscal 1997 from $3.4 million for the first six months
of fiscal 1996. The increase is attributed to the increased production costs
resulting from the launch of Live! magazine.
Corporate general and administrative costs increased by $1.5 million, or
22%, to $8.4 million for the first six months of fiscal 1997 from $6.9 million
for the first six months of fiscal 1996. Much of the increase resulted from
increased compensation expense associated with growth in administrative
functions necessary to support the development of the Company's principal
business, and more recent development efforts in Ticketmaster Publications,
Ticketmaster Online and Ticketmaster Travel.
Depreciation and amortization increased by $0.1 million, or 3%, to $4.9
million for the first six months of fiscal 1997 from $4.8 million for the first
six months of fiscal 1996. The increase is largely attributed to amortization
cost in excess of net assets acquired which resulted from the valuation of
purchased user agreements in connection with the acquisition of Ticketmaster's
Nashville licensee in February 1996.
The income tax benefit decreased by $0.5 million, or 78%, to $0.1 million
for the first six months of fiscal 1997 from $0.6 million for the first six
months of fiscal 1996. The decrease is attributed to higher earnings subject to
state and foreign taxes and the effect of nondeductible amortization of
intangible foreign assets.
As a result of the foregoing, net losses from Consolidated Businesses
increased by $0.1 million, or 4%, to $2.4 million for the first six months of
fiscal 1997 from $2.3 million for the first six months of fiscal 1996.
UNCONSOLIDATED JOINT VENTURES
Ticket operations revenues increased by $5.2 million, or 19%, to $32.7
million for the first six months of fiscal 1997 from $27.5 million for the first
six months of fiscal 1996. The increase is attributed to an increase of 17% in
the number of tickets sold (from 7.5 million to 8.8 million tickets). The
increase in the number of tickets sold resulted from the formation of joint
ventures with the Company's Australian licensee commencing in December 1995, an
increase in popular music activity, an increase in ticket sales of Major League
Baseball
28
<PAGE> 30
and the National Hockey League as compared to the first six months of fiscal
1996 when these leagues were experiencing the residual effects of work stoppages
and an increase related to new clients including a number of new Major League
Soccer teams.
Concession control systems revenues increased by $2.2 million, or 21%, to
$13.0 million for the first six months of fiscal 1997 from $10.8 million in the
first six months of fiscal 1996, as a result of sales related to the release of
a new product.
Publication revenue decreased by $0.8 million or 83%, to $0.2 million for
the first six months of fiscal 1997 from $1.0 million for the first six months
of fiscal 1996 due to the discontinued distribution of the monthly Entertainment
Guide, which has been replaced with Live! magazine, a publication of
Ticketmaster Publications, all costs and revenues of which are included in the
Consolidated Businesses.
Ticketing operations costs increased by $2.7 million, or 17%, to $18.3
million for the first six months of fiscal 1997 from $15.7 million for the first
six months of fiscal 1996. As a percentage of ticketing operations revenues,
these expenses decreased from 57% to 56%.
Concession control systems operating costs increased by $1.3 million, or
17%, to $8.5 million for the first six months of fiscal 1997 from $7.2 million
in the first six months of fiscal 1996, as a result of the increase in revenues.
As a percentage of concession control systems revenues, these costs decreased
from 67% to 65%.
Concession control systems selling, general and administrative costs
decreased by $0.1 million, or 1%, to $4.7 million in the first six months of
fiscal 1997 from $4.8 million in the first six months of fiscal 1996.
Publications costs decreased by $0.5 million, or 79%, to $0.1 million for
the first six months of fiscal 1997 from $0.6 million for the first six months
of fiscal 1996 due to the discontinued distribution of the monthly Entertainment
Guide, which has been replaced with Live! magazine, a publication of
Ticketmaster Publications, all costs and revenues of which are included in the
Consolidated Businesses.
Depreciation and amortization increased by $0.4 million, or 17%, to $2.6
million for the first six months of fiscal 1997 from $2.2 million for the first
six months of fiscal 1996. The increase is attributed to the amortization cost
in excess of net assets acquired which resulted from the valuation of purchased
user agreements in connection with the formation in December 1995 of the
Australian Joint Ventures.
The income tax provision increased by $0.1 million, or 277%, to $0.2
million for the first six months of fiscal 1997 from $0.1 million for the first
six months of fiscal 1996. The increase is attributed to foreign taxes payable
on increased earnings in the Company's European Joint Venture.
As a result of the foregoing, net income from Unconsolidated Joint Ventures
increased by $1.2 million, or 28%, to $5.4 million for the first six months of
fiscal 1997 from $4.1 million for the first six months of fiscal 1996.
MANAGED BUSINESSES
Aggregate revenues for the Managed Businesses increased by $22.7 million,
or 18%, to $146.2 million for the first six months of fiscal 1997 from $123.5
million for the first six months of fiscal 1996 principally as a result of an
increase of $14.7 million, or 14%, to $122.0 million in ticket operation revenue
and an increase of $3.7 million or 251% to $5.2 million for the first six months
of fiscal 1997 from $1.5 million from the first six months of fiscal 1996 in
sponsorship and promotion revenue.
Aggregate income before other operating items, interest and taxes for the
Managed Businesses increased by $0.6 million, or 4%, to $14.8 million for the
first six months of fiscal 1997 from $14.2 million for the first six months of
fiscal 1996.
29
<PAGE> 31
FISCAL YEAR 1996 COMPARED WITH FISCAL YEAR 1995
The following tables set forth operating results for the Consolidated
Businesses and the Unconsolidated Joint Ventures, collectively, the Managed
Businesses. The amounts shown for the Unconsolidated Joint Ventures represent
the full balance for each line item and do not give effect to the joint venture
ownership interests held by entities other than the Company.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31, 1995 YEAR ENDED JANUARY 31, 1996
------------------------------------------ ------------------------------------------
CONSOLIDATED UNCONSOLIDATED MANAGED CONSOLIDATED UNCONSOLIDATED MANAGED
BUSINESSES JOINT VENTURES BUSINESSES BUSINESSES JOINT VENTURES BUSINESSES
------------ -------------- ---------- ------------ -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Ticketing operations....... $175,140 $ 46,921 $ 222,061 $150,879 $ 54,178 $ 205,057
Concession control
systems................. -- 19,354 19,354 -- 22,985 22,985
Publications............... 4,640 2,129 6,769 4,198 1,939 6,137
Sponsorship & promotion.... 1,849 865 2,714 3,972 951 4,923
Merchandising.............. 1,321 -- 1,321 2,201 -- 2,201
-------- ------- -------- -------- ------- --------
182,950 69,269 252,219 161,250 80,053 241,303
-------- ------- -------- -------- ------- --------
Operating costs, expenses and
other items:
Ticketing operations....... 112,695 28,208 140,903 97,147 30,836 127,983
Ticketing selling, general
and administrative...... 28,917 9,094 38,011 27,748 9,232 36,980
Concession control systems
operations.............. -- 12,162 12,162 -- 15,912 15,912
Concession control systems
selling, general and
administrative.......... -- 8,770 8,770 -- 9,834 9,834
Publications............... 2,908 1,261 4,169 9,129 1,148 10,277
Merchandising.............. 1,222 -- 1,222 1,891 -- 1,891
Corporate general and
administrative.......... 13,722 -- 13,722 14,758 -- 14,758
Write off of in-process
research and
development............. 7,500 -- 7,500 -- -- --
-------- ------- -------- -------- ------- --------
166,964 59,495 226,459 150,673 66,962 217,635
-------- ------- -------- -------- ------- --------
Income before other operating
items, interest and
taxes...................... 15,986 9,774 $ 25,760 10,577 13,091 $ 23,668
======== ========
Depreciation and
amortization............ 13,301 5,062 9,325 4,401
Equity in net income of
unconsolidated
affiliates.............. (1,360) -- (1,458) --
-------- ------- -------- -------
Operating income............. 4,045 4,712 2,710 8,690
Interest expense and other... 13,393 580 13,055 942
Income tax provision
(benefit).................. (2,670) 500 (2,250) 305
-------- ------- -------- -------
Net (loss) income............ $ (6,678) $ 3,632 $ (8,095) $ 7,443
======== ======= ======== =======
</TABLE>
CONSOLIDATED BUSINESSES
Revenues from ticketing operations decreased by $24.2 million, or 14%, to
$150.9 million for fiscal 1996 from $175.1 million for fiscal 1995. The decrease
is primarily attributed to a decrease of 12% in the number of tickets sold (from
42.5 million to 37.6 million tickets) and in the Company's average per ticket
operation revenue of 3% (from $4.13 to $4.01). The decrease in the number of
tickets sold was largely attributable to fewer performances by popular music
performers during fiscal 1996 as compared to fiscal 1995. The 4% decrease in
average revenue per ticket is comparable to the 4% decrease in average gross
price per ticket of tickets sold (from $30.81 to $29.68).
30
<PAGE> 32
Publications revenues decreased by $0.4 million, or 10%, to $4.2 million
for fiscal 1996 from $4.6 million for fiscal 1995. The decrease is largely
attributed to fewer subscription sales of the Entertainment Guide during fiscal
1996. The decrease in subscriptions is consistent with the decrease in ticket
sales through the Company's call centers which was the only distribution channel
through which the Entertainment Guide was sold.
Sponsorship & promotions revenues increased by $2.2 million, or 115%, to
$4.0 million for fiscal 1996 from $1.8 million for fiscal 1995. The increase is
primarily attributed to an increase in sponsorship and promotion activity with
strategic marketing partners resulting from the Company's efforts to create
integrated marketing opportunities revolving around live events, call centers,
ticket stock, envelopes and event promotional material.
Merchandising revenues increased by $0.9 million, or 67%, to $2.2 million
for fiscal 1996 from $1.3 million in fiscal 1995. Fiscal 1996 revenues include a
full year of operations while fiscal 1995 revenues include six months of
operations.
Ticketing operations costs decreased by $15.6 million, or 14%, to $97.1
million in fiscal 1996 from $112.7 million in fiscal 1995. This decrease is
attributed to the decrease in ticketing operations revenues as these costs are
primarily variable in nature. As a percentage of ticketing operation revenues,
these expenses amounted to 64% during both periods.
Publications costs increased by $6.2 million, or 214%, to $9.1 million in
fiscal 1996 from $2.9 million in fiscal 1995. This increase is attributed to the
design and pre-production cost attributable to the launch of Live! magazine by
Ticketmaster Publications.
Merchandising costs increased by $0.7 million, or 55%, to $1.9 million in
fiscal 1996 from $1.2 million in fiscal 1995. Fiscal 1996 costs include a full
year of operations while fiscal 1995 costs include six months of operations.
Corporate general and administrative costs increased by $1.1 million, or
8%, to $14.8 million in fiscal 1996 from $13.7 million in fiscal 1995. The
increase is primarily attributed to costs associated with litigation against the
Company and investigations into its operations by government agencies, see
"Business - Government Investigation and Litigation."
During fiscal 1995, the Company incurred a charge of $7.5 million to write
off purchased in-process research and development in connection with the
formation of the Pacer/CATS/CCS Joint Venture.
Depreciation and amortization decreased by $4.0 million, or 30%, to $9.3
million in fiscal 1996 from $13.3 million in fiscal 1995. The decrease is
attributed to the absence of a $3.8 million charge to amortization to write-off
the value of covenants-not-to-compete which was incurred in fiscal 1995 in
connection with the formation of the Pacer/CATS/CCS Joint Venture.
The income tax benefit decreased by $0.4 million, or 16%, to $2.3 million
in fiscal 1996 from $2.7 million in fiscal 1995. Income tax benefit as a
percentage of pre-tax loss decreased from 29% to 22% from fiscal 1995 to fiscal
1996. The decrease is attributed to higher earnings subject to state and foreign
taxes and the effect of nondeductible amortization of intangible foreign assets.
As a result of the foregoing, net loss from Consolidated Businesses
increased by $1.4 million, or 21%, to $8.1 million for fiscal 1996 from $6.7
million for fiscal 1995.
UNCONSOLIDATED JOINT VENTURES
Revenues from ticket operations increased by $7.3 million, or 15%, to $54.2
million in fiscal 1996 from $46.9 million in fiscal 1995. This increase is
primarily attributed to an increase of 17% in the number of tickets sold (from
13.2 million to 15.5 million tickets). The increase in the number of tickets
sold was largely attributed to approximately a 39% growth in ticket sales from
the Company's venture in the United Kingdom, increased popularity of
professional sport franchises in areas serviced by these joint ventures, and the
formation of joint ventures with the Company's Australian licensee during fiscal
1996.
31
<PAGE> 33
Concession control systems revenues increased by $3.6 million, or 19%, to
$23.0 million in fiscal 1996 from $19.4 million in fiscal 1995, because fiscal
1995 figures represent the results of operations from inception (April 15, 1994)
through fiscal year end.
Ticketing operations costs increased by $2.6 million, or 9%, to $30.8
million in fiscal 1996 from $28.2 million in fiscal 1995. This increase is
attributed to the increase in ticketing operations revenues as these costs are
primarily variable in nature. Ticket operations costs decreased as a percentage
of ticket operations revenues to 57% in fiscal 1996 from 60% in fiscal 1995.
Much of this decrease is attributed to increased efficiencies in the call
centers which service these joint ventures and increased revenue per ticket.
Concession control systems operating costs increased by $3.7 million, or
31%, to $15.9 million in fiscal 1996 from $12.2 million in fiscal 1995 because
fiscal 1996 costs represent a full year of operations as noted previously. As a
percentage of concession control systems revenues, these costs increased from
63% to 69% due to increased research and new product development expenses.
Concession control systems selling, general and administrative costs
increased by $1.0 million, or 12%, to $9.8 million in the fiscal 1996 from $8.8
million in fiscal 1995 because fiscal 1996 costs represent a full year of
operations as noted previously.
Depreciation and amortization decreased by $0.7 million, or 13%, to $4.4
million in fiscal 1996 from $5.1 million in fiscal 1995. The decrease is
attributed to certain purchased user agreements having become fully amortized
during fiscal 1995.
The income tax provision decreased by $0.2 million, or 39%, to $0.3 million
in fiscal 1996 from $0.5 million in fiscal 1995. The decrease is attributed to
the reduced profitability of the Pacer/CATS/CCS Joint Venture's foreign
operations.
As a result of the foregoing, net income from Unconsolidated Joint Ventures
increased by $3.8 million, or 105%, to $7.4 million for fiscal 1996, from $3.6
million for fiscal 1995.
MANAGED BUSINESSES
Aggregate revenues for the Managed Businesses decreased by $10.9 million,
or 4%, to $241.3 million in fiscal 1996 from $252.2 million in fiscal 1995,
principally as a result of a decrease of $17.0 million, or 8%, to $205.1 million
in ticket operations revenue, offset by increases in sponsorship and promotion
revenue of $2.2 million and concession control systems revenue of $3.6 million
in fiscal 1996.
Aggregate income before other operating items, interest and taxes for the
Managed Businesses decreased by $2.1 million, or 8%, to $23.7 million in fiscal
1996 from $25.8 million in fiscal 1995, principally as a result of an increase
of $6.1 million, or 147%, to $10.3 million in publications costs resulting from
the anticipated fiscal 1997 launch of Live! magazine and losses incurred in the
concession control systems businesses of the Pacer/CATS/CCS Joint Venture offset
by the effect of the write-off of in-process research and development of $7.5
million in fiscal 1995.
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<PAGE> 34
FISCAL YEAR 1995 COMPARED WITH FISCAL YEAR 1994
The following tables set forth operating results for the Consolidated
Businesses and the Unconsolidated Joint Ventures, collectively, the Managed
Businesses. The amounts shown for the Unconsolidated Joint Ventures represent
the full balance for each line item and do not give effect to the joint venture
ownership interests held by entities other than the Company.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31, 1994 YEAR ENDED JANUARY 31, 1995
------------------------------------------ ------------------------------------------
UNCONSOLIDATED UNCONSOLIDATED
CONSOLIDATED JOINT MANAGED CONSOLIDATED JOINT MANAGED
BUSINESSES VENTURES BUSINESSES BUSINESSES VENTURES BUSINESSES
------------ -------------- ---------- ------------ -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Ticketing operations..... $140,341 $ 39,457 $ 179,798 $175,140 $ 46,921 $ 222,061
Concession control
systems............... -- -- -- -- 19,354 19,354
Publications............. 4,575 1,599 6,174 4,640 2,129 6,769
Sponsorship &
promotion............. 1,724 756 2,480 1,849 865 2,714
Merchandising............ -- -- -- 1,321 -- 1,321
-------- -------- -------- -------- -------- --------
146,640 41,812 188,452 182,950 69,269 252,219
-------- -------- -------- -------- -------- --------
Operating costs, expenses
and other items:
Ticketing operations..... 88,089 22,846 110,935 112,695 28,208 140,903
Ticketing selling,
general and
administrative........ 28,931 9,187 38,118 28,917 9,094 38,011
Concession control
systems operations.... -- -- -- -- 12,162 12,162
Concession control
systems selling,
general and
administrative........ -- -- -- -- 8,770 8,770
Publications............. 2,297 1,108 3,405 2,908 1,261 4,169
Merchandising............ -- -- -- 1,222 -- 1,222
Corporate general and
administrative........ 11,738 -- 11,738 13,722 -- 13,722
Write off of in-process
research and
development........... -- -- -- 7,500 -- 7,500
-------- -------- -------- -------- -------- --------
131,055 33,141 164,196 166,964 59,495 226,459
-------- -------- -------- -------- -------- --------
Income before other
operating items, interest
and taxes................ 15,585 8,671 $ 24,256 15,986 9,774 $ 25,760
======== ========
Depreciation and
amortization.......... 9,399 4,826 13,301 5,062
Equity in net income of
unconsolidated
affiliates............ (1,577) -- (1,360) --
-------- -------- -------- --------
Operating income........... 7,763 3,845 4,045 4,712
Interest expense and
other.................... 3,923 107 13,393 580
Income tax provision
(benefit)................ 3,800 -- (2,670) 500
-------- -------- -------- --------
Net (loss) income.......... $ 40 $ 3,738 $ (6,678) $ 3,632
======== ======== ======== ========
</TABLE>
CONSOLIDATED BUSINESSES
Revenues from ticketing operations increased by $34.8 million, or 25%, to
$175.1 million in fiscal 1995 from $140.3 million in fiscal 1994. The increase
is attributed to an increase of 10% in the number of tickets sold (from 38.7
million to 42.5 million tickets) and in the Company's average per ticket
operation revenue of 14% (from $3.63 to $4.13). The increase in the number of
tickets sold was largely attributable to a strong
33
<PAGE> 35
performance schedule that included a large number of event dates. The 18%
increase in average per ticket operation revenue is comparable to the 19%
increase in average gross price per ticket of tickets sold (from $25.90 to
$30.81), which was a result of a trend on the part of certain popular music
performers toward higher ticket prices.
Sponsorship & promotions revenues increased by $0.1 million, or 7%, to $1.8
million for fiscal 1995 from $1.7 million in fiscal 1994. The increase is a
result of increased sponsorship and promotional activity created around live
events, ticket stock, ticket envelopes and event promotional material.
Merchandising was included in the consolidated results of the Company for
the first time in fiscal year 1995 with revenues totaling $1.3 million.
Ticketing operations costs increased by $24.6 million, or 28%, to $112.7
million in fiscal 1995 from $88.1 million in fiscal 1994. This increase is
attributed to the increase in ticketing operations revenues as these costs are
primarily variable in nature. As a percentage of ticketing operations revenues,
these expenses remained relatively constant at 64% and 63% in fiscal 1995 and
fiscal 1994, respectively.
Publications costs increased by $0.6 million, or 27%, to $2.9 million in
fiscal 1995 from $2.3 million in fiscal 1994. The increase is attributed to an
increase in the distribution of complimentary issues of the Entertainment Guide
during fiscal 1995 as compared to fiscal 1994.
Merchandising had its first year of operations in fiscal 1995; costs
totaled $1.2 million or 93% of merchandising revenue.
Corporate general and administrative costs increased by $2.0 million, or
17%, to $13.7 million in fiscal 1995 from $11.7 million in fiscal 1994. The
increase is primarily attributed to costs associated with litigation against the
Company and investigations into its operations by government agencies, see
"Business -- Government Investigations and Litigation."
During fiscal 1995, the Company incurred a charge of $7.5 million to write
off purchased in-process research and development in connection with the
formation of the Pacer/CATS/CCS Joint Venture.
Depreciation and amortization increased by $3.9 million, or 42%, to $13.3
million in fiscal 1995 from $9.4 million in fiscal 1994. The increase is
attributed to a $3.8 million charge to amortization to write-off the value of
covenants-not-to-compete in connection with the formation of the Pacer/CATS/CCS
Joint Venture.
Interest expense and other increased by $9.5 million, or 241%, to $13.4
million in fiscal 1995 from $3.9 million in fiscal 1994. The increase is
attributed to an increase in average bank borrowings outstanding during fiscal
1995 as compared to borrowings outstanding during fiscal 1994.
Income taxes changed by $6.5 million, or 170%, to a benefit of $2.7 million
in fiscal 1995 from an expense of $3.8 million in fiscal 1994.
As a result of the foregoing, the Consolidated Businesses recognized a net
loss of $6.7 million for fiscal 1995. In the absence of a $3.8 million charge to
amortization to write off the value of covenants-not-to-compete and a $7.5
million change to write off in-process research and development (both charges
incurred in connection with the formation of the Pacer/CATS/CCS Joint Venture),
the Consolidated Businesses would have recognized net income of $4.6 million.
UNCONSOLIDATED JOINT VENTURES
Revenues from ticket operations increased by $7.4 million, or 19%, to $46.9
million in fiscal 1995 from $39.5 million in fiscal 1994. This increase is
primarily attributed to an increase of 8% in the number of tickets sold (from
12.2 million to 13.2 million tickets) and in average per ticket operation
revenue of 10% (from $3.24 to $3.57). The increase in the number of tickets sold
was largely attributable to a strong performance schedule that included a large
number of event dates. The 15% increase in average revenue per ticket is
comparable to the 13% increase in average gross price per ticket of tickets sold
(from $23.15 to $26.26), which was a result of a trend on the part of certain
popular music performers toward higher ticket prices.
34
<PAGE> 36
Publication revenues increased by $0.5 million, or 33%, to $2.1 million in
fiscal 1995 from $1.6 million in fiscal 1994 as a result of increased
subscription sales of the Entertainment Guide.
Concession control systems commenced operations in fiscal 1995 (inception,
April 15, 1994) and resulted in revenues of $19.4 million.
Ticketing operations costs increased by $5.4 million, or 23%, to $28.2
million in fiscal 1995 from $22.8 million in fiscal 1994. This increase is
attributed to the increase in ticketing operations revenues as these costs are
primarily variable in nature. Ticket operations costs increased as a percentage
of ticket operations revenues to 60% in fiscal 1995 from 58% in fiscal 1994.
Publications costs increased by $0.2 million, or 14%, to $1.3 million in
fiscal 1995 from $1.1 million in fiscal 1994 as a result of increased
subscription sales of the Entertainment Guide.
Concession control systems commenced operations in fiscal 1995 (inception,
April 15, 1994) and incurred related costs of $12.2 million or 63% of revenue;
selling, general and administrative costs incurred by concession control systems
totaled $8.8 million or 45% of revenue.
Depreciation and amortization increased by $0.3 million, or 5%, to $5.1
million in fiscal 1995 from $4.8 million in fiscal 1994. The increase is
attributed to the formation of the Pacer/CATS/CCS Joint Venture.
The income tax provision increased to $0.5 million in fiscal 1995 from $0.0
in fiscal 1994. The increase is attributed to the formation of the
Pacer/CATS/CCS Joint Venture.
As a result of the foregoing, net income from Unconsolidated Joint Ventures
decreased by $0.1 million, or 3%, to $3.6 million for fiscal year 1995 from $3.7
million for fiscal 1994. The decrease is due to the net loss incurred by the
Pacer/CATS/CCS Joint Venture, which totaled $3.3 million, offset by a $3.2
million increase in the ticketing Joint Ventures' net income.
MANAGED BUSINESSES
Aggregate revenues for the Managed Businesses increased by $63.7 million,
or 34%, to $252.2 million in fiscal 1995 from $188.5 million in fiscal 1994,
principally as a result of an increase of $42.3 million, or 24%, to $222.0
million in ticket operations revenue and the concession control systems revenue
of $19.4 million in fiscal 1995.
Aggregate income before other operating items, interest and taxes for the
Managed Businesses increased by $1.5 million, or 6%, to $25.8 million in fiscal
1995 from $24.3 million in fiscal 1994, principally as a result of an increase
of $12.3 million, or 18%, to $81.2 million in ticketing operations income net of
ticketing operations costs offset by the write off of in-process research and
development of $7.5 million and covenants-not-to-compete of $3.8 million.
35
<PAGE> 37
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements currently include amounts for the
purchase of a building and tenant improvements, capital investments in computer
and telephone equipment, as well as investments in new ventures, business
acquisitions or strategic joint ventures. As shown in the Company's Consolidated
Statements of Cash Flows appearing elsewhere in this Prospectus, during fiscal
1996 and the six months ended July 31, 1996, the Company's investments in
property, equipment and fixed and other long-term assets aggregated $3.6 million
and $3.3 million, respectively. Cash requirements for business acquisitions and
the formation of new ventures aggregated $2.2 million and $1.6 million for
fiscal 1996 and the six months ended July 31, 1996, respectively. Excluding the
acquisitions and formation of new venture investment activity, the Company's
annual capital expenditures for fiscal 1997 and immediately beyond are expected
to include $14.0 million for the purchase of a building and tenant improvements,
$4.5 million of replacements or upgrades, $5.5 million in expanded call center
capacity and additional amounts which management determines are necessary in
order to maintain the Company's competitive position or to otherwise achieve its
business strategies.
Historically, the Company's principal sources of cash have been cash flow
from operations and borrowings under its bank credit facilities. As of July 31,
1996, the Company had working capital of $9.4 million. As of January 31, 1996,
working capital was $4.0 million. The Company historically has had small
positive or negative working capital balances, depending upon the timing of the
use of cash for the purchase of property and equipment or investments in other
income producing noncurrent assets.
As of July 31, 1996, the Company had cash and cash-equivalents of $11.1
million for its own account, exclusive of funds held in accounts on behalf of
venues or promoters. As of that date, the Company had $95.8 million in
outstanding bank borrowings under its $100 million revolving bank credit line
and $75 million outstanding on a bank term loan, payable December 31, 1999. The
Company's loan agreements contain certain covenants and restrictions. The
Company is in compliance with all of its loan covenants. These loan agreements
are secured by virtually all of the Company's assets. See "Description of
Certain Indebtedness."
Also as of July 31, 1996, Pacer/CATS/CCS had indebtedness of $7.5 million
outstanding under a bank term loan, with monthly interest payments only due
through June 1997 and principal and interest payable monthly from July 1997
through June 1999. The loan agreement is secured by all of Pacer/CATS/CCS'
assets and contains certain restrictions and covenants, with which the joint
venture is in full compliance. Ticketmaster Corporation has entered into an
interest keep-well agreement expiring July 31, 1997 (or sooner, subject to its
terms) covering $500,000 of Pacer/CATS/CCS' interest payments on this debt. See
"Description of Certain Indebtedness."
As of July 31, 1996, the Company's future commitments included a $5 million
Exchangeable Promissory Note due in June 1997, which is a portion of the payment
remaining from the Company's June 1996 acquisition of a 50% interest in the
European Joint Venture, as well as annual office and equipment lease expenses of
approximately $5.5 million. In addition, the Company has entered into letters of
intent to acquire by purchase, redemption or otherwise the equity interest of
its partner in the joint venture covering all or parts of Indiana, Kentucky,
Ohio and West Virginia; to acquire the license rights of its Delaware Valley
(Philadelphia) licensee; to acquire a 50% equity interest in its Mexican
licensee; and to enter into a joint venture with the parent of its Mexican
licensee to market and operate the Ticketmaster System throughout Central and
South America. In the event that all of the transactions contemplated by such
letters of intent are consummated, the aggregate consideration would be
approximately $47.8 million, comprised of approximately $20.8 million in cash
and $27.0 million in Preferred Stock which automatically converts upon the
occurrence of a public offering into shares of Common Stock at the initial
public offering price per share.
The Company intends to use the net proceeds of the Offering (i) to repay
outstanding indebtedness incurred or to be incurred in connection with the
Pending Transactions, (ii) to repay a portion of the outstanding indebtedness
under the Credit Agreement and (iii) for general corporate purposes. The Company
anticipates that funds from the Offering, from operations and from its restated
bank lending facilities will be sufficient to meet its working capital, capital
expenditure and debt service requirements for the foreseeable future. However,
to the extent that such funds are insufficient, the Company may need to incur
additional indebtedness and/or refinance existing indebtedness, which the
Company's bank agreement may restrict.
36
<PAGE> 38
SEASONALITY AND QUARTERLY RESULTS
The Company's ticketing operations results for its Managed Businesses are
impacted by fluctuations in the availability of events for sale to the public,
which varies depending upon scheduling by clients. This, together with the
general practice of scheduling the commencement of ticket sales several months
prior to event dates, tends to benefit the Company's first two fiscal quarters.
Set forth below are quarterly ticket quantities and gross sales for the Managed
Businesses for the past three fiscal years and the first two quarters of the
current fiscal year:
TICKETS SOLD
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER TOTAL
- ----------------------------- ------------- --------------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
1994....................... 12,207 14,325 12,522 11,795 50,849
1995....................... 16,649 14,939 11,649 12,378 55,614
1996....................... 13,509 13,667 12,759 13,181 53,116
1997 (six months only)..... 15,268 15,135 30,403
</TABLE>
GROSS TICKET RECEIPTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER TOTAL
- ----------------------------- ------------- --------------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
1994....................... $ 283,518 $ 351,741 $ 334,190 $ 313,923 $1,283,372
1995....................... 489,721 455,799 352,675 355,607 1,653,801
1995....................... 383,564 389,791 379,741 378,482 1,531,578
1997 (six months only)..... 425,382 444,611 869,994
</TABLE>
INFLATION AND FOREIGN EXCHANGE RISK
General economic inflation has not had a significant impact on the
Company's operations during the periods covered by the accompanying Consolidated
Financial Statements.
The Company is not presently subject to significant foreign exchange risk
as international operations currently constitute a minor part of its operations.
EFFECT OF RECENT ACCOUNTING CHANGES
In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 encourages
a new method of recognizing stock-based compensation expense using the estimated
fair value of employee stock options. Alternatively, companies may choose to
retain the approach set forth in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and provide expanded footnote
disclosures. The statement is effective for the Company's fiscal year 1997. The
Company does not plan to use the fair value method when it adopts the
pronouncement.
37
<PAGE> 39
BUSINESS
GENERAL
Ticketmaster is the leading provider of automated ticketing services in the
U.S. with over 3,500 clients, including many of the country's foremost
entertainment facilities and promoters and 73 professional sports franchises.
The Company has established its market position by providing these clients with
comprehensive ticket inventory control and management, a broad distribution
network and dedicated marketing and support services. Ticket orders are received
and fulfilled through operator-staffed call centers and independent sales
outlets remote to the facility box office. Revenue is generated principally from
convenience charges received by the Company for tickets sold on its clients'
behalf. The Company generally serves as an exclusive agent for its clients and
typically has no financial risk for unsold tickets. The Company, through the
Managed Businesses (the Consolidated Businesses together with the Unconsolidated
Joint Ventures), sold 53.1 million tickets in fiscal 1996 and 30.4 million
tickets during the first six months of fiscal 1997, while generating revenues of
$241.3 million and $146.2 million, respectively, for those periods.
The Company believes that its principal business, live entertainment
ticketing, will experience growth as a result of increased revenues under
existing venue contracts and increased general interest in and attendance at
live entertainment events. The Company believes that significant opportunities
exist through continued penetration of this principal market. Additionally, the
Company believes that further ticketing opportunities will arise from the
construction of new and larger facilities, the increase in the number of
professional sports teams and the development of new sports leagues.
Furthermore, the Company plans to continue to broaden its client base to include
such venues as museums, zoos, amusement parks, state and county fairs and other
locations such as golf courses, ski resorts and trade shows.
The Company also believes that significant opportunities exist
internationally to attract additional venues in a historically under-penetrated
market for ticketing services. In addition, the continued enthusiasm for soccer
and growing popularity of major American sports such as football, baseball and
basketball should lead to increased utilization of these international venues
and provide additional revenue opportunities. In order to be in a position to
capitalize on these trends, the Company expects to expand its existing
operations in the U.K., Australia and, through a new joint venture, in Mexico,
and is exploring further opportunities in Europe, the Pacific Rim and Central
and South America.
The Company is continuing to leverage its widely recognized brand name and
extensive distribution capabilities by developing new opportunities in related
areas, such as entertainment information and publishing, merchandising,
advertising, promotional services and direct marketing. Specific examples of its
efforts include offering integrated brand management and marketing services to
strategic partners, such as MasterCard International and Sprint Communications,
through sponsorship advertising opportunities during live events, during
telephone ticketing services, on its ticket stock and envelopes, on event
promotional material and in additional media outlets which the Company is
developing. In addition, the Company recently launched Live!, a monthly
entertainment magazine and event guide which the Company believes is a natural
extension of its existing distribution channels. The Company has also recently
launched Ticketmaster Online (http://www.ticketmaster.com), its site on the
World Wide Web designed to promote ticket sales for live events, disseminate
event information and ultimately offer transactional and merchandising services.
These efforts to create new promotional, marketing and distribution
opportunities by utilizing and integrating the Company's traditional principal
ticketing services and brand name have formed the basis for new growth
opportunities in the future.
The Company believes that the Ticketmaster System and its extensive
distribution capabilities provide a competitive advantage that enhances the
Company's ability to attract new clients and maintain its existing client base.
The Ticketmaster System, which includes both hardware and software, is typically
installed in a client's facility box office and provides a single centralized
inventory control management system capable of tracking total ticket inventory
for all events, whether sales are made on a season, subscription, group or
individual ticket basis. The Ticketmaster System is capable of processing over
100,000 tickets per hour in certain markets, and each of its 18 computer systems
can support 10,000 users per system, of which as many as 3,000 can be online at
any one time.
38
<PAGE> 40
Through its Managed Businesses, Ticketmaster has a comprehensive domestic
distribution system that includes approximately 2,800 remote sales outlets in 44
states covering many of the major metropolitan areas in the U.S. and 17 call
centers with approximately 1,750 operator positions. The Company provides the
public with convenient access to tickets and information regarding entertainment
events. Ticket purchasers are assessed a convenience charge for each ticket sold
offsite by the Company on behalf of its clients. These charges are negotiated
and included in the Company's contracts with its clients. The versatility of the
Ticketmaster System allows it to be customized to satisfy a full range of client
requirements.
From fiscal 1991 through 1996, the number of tickets sold and revenues for
the Managed Businesses have grown from 29.1 million tickets and $96.1 million of
revenues to 53.1 million tickets and $241.3 million of revenues, a compounded
annual growth rate of 13% and 20%, respectively.
CLIENT RELATIONSHIPS
The Company's clients include many of the most well known arenas, stadiums,
theaters, sports teams and promoters in the U.S. The Company currently has in
excess of 3,500 clients ranging in size from large stadiums with more than
60,000 seats to smaller theaters with seating in the hundreds, and from
multi-event promoters to one-time single event promoters.
Representative of the Company's clients are the following:
ARENAS, STADIUMS AND THEATERS
<TABLE>
<S> <C>
Alamodome, San Antonio, TX Market Square Arena, Indianapolis, IN
Arie Crown Theater, Chicago, IL Meadowlands Sports Complex, East Rutherford, NJ
Astrodome, Houston, TX Miami Arena, Miami, FL
Blossom Amphitheatre, Cleveland, OH Nassau Coliseum, Uniondale, NY
Bradley Center, Milwaukee, WI Nederlander New York Broadway Theatres, New York,
Cajundome, Lafayette, LA NY
Centrum, Worcester, MA The Olympic Stadium, Atlanta, GA
Charlotte Coliseum, Charlotte, NC The Omni, Atlanta, GA
Chicago Theater, Chicago, IL Orlando Arena and Centroplex, Orlando, FL
Coral Sky Amphitheatre, West Palm Beach, FL Orpheum Theatre, Boston, MA
Deer Creek Music Center, Indianapolis, IN The Palace at Auburn Hills, Auburn Hills, MI
Fargo Dome, Fargo, ND Pine Knob Music Theatre, Clarkston, MI
Fleet Center, Boston, MA The Pond, Anaheim, CA
Freedom Hall, Louisville, KY Pontiac Stadium, Detroit, MI
Garden State Arts Center, Holmdel, NJ Pyramid, Memphis, TN
The Georgia Dome, Atlanta, GA Radio City Music Hall, New York, NY
Great Western Forum, Inglewood, CA RCA Dome, Indianapolis, IN
Greek Theatre, Los Angeles, CA Rosemont Horizon, Rosemont, IL
Gund Arena, Cleveland, OH Rupp Arena, Lexington, KY
Ice Palace, Tampa, FL Sun Dome, Tampa, FL
Irvine Meadows Amphitheatre, Costa Mesa, CA Star Lake Amphitheatre, Pittsburgh, PA
Joe Louis Arena, Detroit, MI The Summit, Houston, TX
Joe Robbie Stadium, Miami, FL Tacoma Dome, Tacoma, WA
John G. Shedd Aquarium and Oceanarium, Chicago, IL Target Center, Minneapolis, MN
Jones Beach Theatre, Wantagh, NY Tennessee Performing Arts Center, Nashville, TN
Key Arena, Seattle, WA The United Center, Chicago, IL
Los Angeles Memorial Coliseum, Los Angeles, CA The Wang Center for the Performing Arts, Boston, MA
Louisiana Superdome, New Orleans, LA The New World Music Theatre, Tinley Park, IL
Madison Square Garden, New York, NY
</TABLE>
39
<PAGE> 41
<TABLE>
<S> <C>
PROMOTERS GENERAL
Avalon Attractions American Music Festival
Belkin Productions Beale Street Music Festival
Cellar Door Concerts Chicago International Film Festival
Jam Productions Del Mar Fair
Livent The 500 Festival Parade
MCA Concerts Houston Exposition and Rodeo
Pace Management New Orleans Jazz and Heritage Festival
Sunshine Promotions U.S. Hotrod Nationals
Walt Disney's Magic Kingdom on Ice
</TABLE>
The Company's clients also include 73 professional sports franchises,
including 16 Major League Baseball teams, 17 National Football League teams, 20
National Basketball Association teams, 13 National Hockey League teams and 7
Major League Soccer teams.
The Company generally enters into written agreements with its clients
pursuant to which it agrees to provide the Ticketmaster System and to serve as
the client's exclusive ticket sales agent for all sales of individual tickets
sold outside of the facility's box office, including any tickets sold at remote
sales outlets, over the phone or through other medium, for a specified period,
typically three to five years. Pursuant to an agreement with a facility, the
Company generally is granted the right to sell tickets for all events presented
at that facility, and as part of such arrangement the Company installs the
Ticketmaster System in the facility's box office. An agreement with a promoter
generally grants the Company the right to sell tickets for all events presented
by that promoter at any facility, unless the facility is covered by an exclusive
agreement with Ticketmaster or another automated ticketing service company. The
terms of the agreements with clients are negotiated on a contract-by-contract
basis. In the case of contracts subject to public bid (e.g., by facilities owned
or managed by municipalities or governmental agencies), the terms are defined,
to a material degree, by the specifications and conditions set forth in the
formal requests for bid.
Clients are routinely required by contract to include the Ticketmaster name
in print, radio and television advertisements for entertainment events sponsored
by such clients. The Ticketmaster name and logo are also prominently displayed
on printed tickets and ticket envelopes.
The Company generally does not buy tickets from its clients for resale to
the public and has no financial risk for unsold tickets. In the U.K., the
Company may from time to time buy tickets from its clients for resale to the
public in an amount typically not exceeding L250,000 in the aggregate. All
ticket prices are determined by the Company's clients and their customers. The
Company's clients also generally determine the scheduling of when tickets go on
sale to the public and what tickets will be available for sale through the
Company. Facilities and promoters, for example, often handle group sales and
season tickets in-house. The Company only sells a portion of its clients'
tickets, the amount of which varies from client to client and varies as to any
single client from year to year.
Among the primary benefits derived by the Company's clients by use of the
Ticketmaster System are (1) centralized control of total ticket inventory as
well as accounting information and market research data, (2) centralized
accountability for ticket proceeds, (3) manageable and predictable transaction
costs, (4) broader and expedited distribution of tickets, (5) wide dissemination
of information about upcoming events through Ticketmaster's call centers, the
Company's Web site and other media platforms, (6) the ability to easily add
additional performances if warranted by demand and (7) marketing and promotional
support.
The Ticketmaster System also provides the Company's clients with
flexibility in processing season, subscription and group ticketing. For example,
a sports team may want to give priority to season tickets, mini-ticket plans and
group sales, permitting those ticket purchasers to have first choice of tickets
before their sale to the general public. In addition, clients have the ability
to structure single or multiple events, including season events, in almost any
number and type of pricing and discount plans.
In general, the Company negotiates a contract with each client. Pursuant to
such contracts, Ticketmaster is granted the right to collect from ticket
purchasers a per ticket convenience charge on all tickets sold at remote sales
outlets, by telephone and other media (e.g., the Company's Web site) and an
additional per order
40
<PAGE> 42
handling charge on all tickets sold by the Company at other than remote sales
outlets to partially offset the cost of fulfillment. The amount of the
convenience charge is determined during the contract negotiation process, and
typically varies based upon numerous factors, including the services to be
rendered to the client, the amount and cost of equipment to be installed at the
client's box office and the amount of advertising and/or promotional allowances
to be provided, as well as the type of event and whether the ticket is purchased
at a remote sales outlet, by telephone, through the Company's Web site or
otherwise. Any deviations from those amounts for any event are negotiated and
agreed upon by the Company and its client prior to the commencement of ticket
sales. During fiscal 1996, the convenience charges generally ranged from $1.50
to $7.00 per ticket. Convenience charges, when added to per order handling
charges, averaged $3.62 per ticket in fiscal 1996. The agreement between the
Company and a client will also establish the amounts and frequency of any
increases in the convenience charge and handling charge during the term of the
agreement.
The agreements with certain of the Company's clients may provide for a
client to participate in the convenience charges paid by ticket purchasers for
tickets bought through the Company for that client's events. The amount of such
participation, if any, is determined by negotiation with clients. Some
agreements also may provide for the Company to make participation advances to
the client, generally recoupable by the Company out of the client's future right
to participations. In isolated instances, the Company may make an upfront, non-
recoupable payment to a client for the right to sell tickets for that client.
If an event is cancelled, the Company's current policy is to refund the per
ticket convenience charges (but not the handling charge which is payable with
respect to transactions by telephone and online orders). Refunds of the ticket
price for a cancelled event are funded by the client. To the extent that funds
then being held by Ticketmaster on behalf of the client are insufficient to
cover all refunds, the client is obligated to provide Ticketmaster with
additional amounts within a specified period of time (typically 24 to 72 hours)
after a request by Ticketmaster. Clients have historically fulfilled these
obligations.
During fiscal 1996, no single client accounted for more than 3.0% of the
Company's total revenues and no single facility accounted for more than 1.5% of
the Company's total revenues. Historically, approximately 15% to 20% of the
Company's contracts are subject to renewal each fiscal year. The Company has
experienced substantial success in renewing its contracts with clients on an
annual basis.
DISTRIBUTION SYSTEM
The Company's distribution system is comprised of remote sales outlets,
call centers and the Company's Web site, Ticketmaster Online
(http://www.ticketmaster.com). During fiscal 1996, ticket sales at the remote
sales outlets and call centers accounted for approximately 52.0% and 48.0%,
respectively, of ticket sales for the Company.
Remote Sales Outlets. Through its Managed Businesses, the Company has
approximately 2,800 remote sales outlets in the U.S. and approximately 80 remote
sales outlets internationally, up from approximately 1,700 remote sales outlets
worldwide at the end of fiscal 1991. During the past seven years, the Company
has emphasized the establishment of retail outlets in high visibility chain
stores with existing name recognition, significant customer traffic and customer
profiles consistent with the type of events sold through the Ticketmaster
System. The majority of remote sales outlets are located in major department,
grocery, music and video stores. Among the retailers that serve as remote sales
outlets are Carson Pirie Scott, Dayton/Hudson, Foley's and Robinsons-May
department stores, Dominick's, Fiesta and Kroger food stores, Blockbuster Music,
Coconuts and Tower Records music stores and Blockbuster Video stores. The
specific stores within each chain that will serve as remote sales outlets is
negotiated by the Company with each chain.
The Company is responsible for installation and maintenance of the hardware
and software necessary to operate the Ticketmaster System at the remote sales
outlets. The Company also trains the remote sales outlet's employees in the use
of the Ticketmaster System, provides support and oversight in connection with
the sale of tickets and furnishes the remote sales outlets with promotional
materials relative to the Ticketmaster System and events for which tickets are
available. The remote sales outlets are responsible for
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the staffing of the stores and their daily operation. The remote sales outlets
generally are paid a commission of approximately 20% to 25% of the convenience
charge, typically subject to a maximum amount per ticket. A majority of sales at
retail outlets are for cash, although some department stores also accept their
own charge cards (in which case the cost of the charge card and payment risk are
borne by the department stores). Ticket purchasers are delivered their tickets
at the point of sale. The remote sales outlets generally deliver sales proceeds
and convenience charges to Ticketmaster on a schedule ranging from daily to
weekly depending on the financial condition of the particular remote sales
outlets and other factors. The Company has not suffered any material loss with
respect to funds collected by its remote sales outlets for remittance to the
Company.
Call centers. Through its Managed Businesses, the Company currently
operates 17 regional call centers in the U.S., up from 10 at the end of fiscal
1991. Ticket purchasers seeking a greater degree of convenience than is afforded
at facility box offices or remote sales outlets can purchase tickets by
telephone seven days a week, up to 14 hours per day, using a major credit card.
Sales agents for the Managed Businesses, staffing up to approximately 1,750
telephone positions, take the customer's credit card order and mail the tickets
directly to the ticket purchasers. Tickets that are purchased by telephone can
also be picked up at the appropriate facility's "will call" ticket window. A per
order handling charge typically is assessed in addition to the per ticket
convenience charge. The ticket sales proceeds and convenience and handling
charges from telephone credit card transactions are generally received by the
Company within two business days after submission to the credit card company.
The call centers also respond to large numbers of informational calls relative
to events, including requests for facility characteristics, directions,
telephone numbers, disability access and seating and local hotels and
restaurants. Concurrently with the sale of tickets to entertainment events, the
Company's call centers offer other products for sale related to the events for
which tickets are being sold. The Company fulfills such sales by ordering the
products from a third party.
The Company's domestic call centers are located in Atlanta, Baton Rouge,
Chicago, Cleveland, Columbus, Dallas, Denver, Detroit, Houston, Los Angeles,
Minneapolis, New York, Orlando, Pittsburgh, San Diego, Seattle and Virginia
Beach. The Company also operates a call center located in London, England with
approximately 102 telephone positions, and, through its Australian joint
venture, a call center located in Melbourne with approximately 58 telephone
positions. In Mexico, the Company's Mexican licensee operates call centers
located in Mexico City and Monterrey with approximately 400 and 90 telephone
positions, respectively.
An important feature of the Company's domestic telephone system is the
ability to channel all or a portion of incoming calls from any city to a
selected regional call center. Accordingly, the number of telephone positions
available to receive telephone orders in a given region is capable of being
increased in advance of the commencement of sales activity for a major event.
Similarly, the ability to network regional call centers affords the Company
backup capabilities in the event that a regional call center experiences
operating difficulties.
Online Services. The Company is expanding its distribution network through
the addition of online services, which permit consumers to purchase tickets and
access information on their personal computers via the Internet. Currently,
tickets for selected events in Florida and Illinois are being distributed by the
Company through a Ticketmaster screen accessible through the America Online
service. The Company currently intends to have online access to all of its
events by the end of April 1997. The Company expects this to become a
significant distribution channel as more consumers begin to transact over the
Internet. Additionally, this medium provides the Company with a cost efficient
way to disseminate information and cross-promote, which will help reduce costs
for these services across the Company's other media.
THE TICKETMASTER SYSTEM
The Company's proprietary operating system and application software, and
its computer and telephone systems, were specifically developed for the
ticketing industry. The Ticketmaster System provides clients with the means to
maintain and control their ticket inventory efficiently. Users of the
Ticketmaster System can effect a range of functions from the most basic to the
most complex, including individual advanced ticket sales, season and
subscription ticketing, day of show walk-up ticket sales and group ticket sales.
The
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Ticketmaster System is capable of processing over 100,000 tickets per hour in
certain markets and each of its 18 computer systems can support 10,000 users per
system, of which as many as 3,000 can be online at any one time.
The Ticketmaster System software is maintained in-house, eliminating any
reliance upon outside software companies. Consequently, the Company is able to
adapt to its clients' needs, changing market conditions and advances in hardware
and other technologies. The Ticketmaster System communicates directly with bank
processing centers for instantaneous online credit card authorization and
electronic deposit of credit card receipts. All of the Ticketmaster System's
online terminals at the call centers and at selected facility box offices have
access to the authorization network.
A recent innovative feature of the Ticketmaster System is the Personal
Computer Interface ("PCI") which provides a Ticketmaster System operator easy
access to the Ticketmaster System through personal computers. The PCI software
allows an operator (including, in certain cases, a box office employee) to move
rapidly through a number of screens to quickly obtain information, complete
transactions and build customer profiles.
Significant measures are taken to prevent system failure in each computer
center. Each system has a live backup standing ready in the event of a primary
system failure. The rooms housing the computer-related equipment are protected
by computer-safe fire protection systems. Dual custom air conditioning units
provide constant climate control. To guard against power outages, the Company
employs uninterruptable power supplies. High capacity back-up generators
eliminate the dependency on public electric sources. Moreover, all data is
continually recorded on a back-up hard copy and the Company maintains an online
disaster recovery site in one of its principal offices. Historically, the
Ticketmaster System has experienced minimal downtime.
The Company's proprietary software is a product of 20 years of continual
enhancement by a team of in-house software and system professionals currently
numbering over 70. The Company's research and development staff has produced
significant enhancements to the Ticketmaster System, including proprietary
ticket printers and data telecommunications multiplexors, and regularly upgrades
its software. During each of fiscal 1994, 1995 and 1996, the Company spent
between $2.2 million and $2.9 million on this activity.
The Ticketmaster System is fully integrated and accessible on a real-time
basis by any authorized user. The Ticketmaster System has been designed to be
flexible in order to handle virtually any reserved seat configuration. Some of
the most commonly used features of the Ticketmaster System are the following:
Creation of Master Seating Chart and Events. A master seating chart
representing all of the seating sections of a facility is created for each
configuration of the facility's events. The master seating chart is then
used as a template for ticketing all events having that configuration.
Ticket text, ticket prices, special seats on hold and similar matters can
all be included on the master seating chart and automatically carried
forward to each event at the time it is created. Events can contain up to
1,000 sections having a combined seating capacity of 150,000 seats. Each
event can support multiple price levels, including pricing options for
subscriptions and discounts.
Editing of Seating Charts and Events. Once created, seating charts and
events can be fully edited online, at any time, by any authorized system
operator. Among the items that can be edited are the performance date or
time, the identity of a performer, new or revised ticket prices, the
structure of the sections and the order in which seats, rows and sections
are sold.
On-Sale Procedures. Once an event template has been created, checked
and customized, the tickets for that event can go on sale to the public.
The sale of tickets for events are under the control of the client's box
office management and, except as may be otherwise determined by the client,
are put on sale simultaneously at the box office, retail outlets, call
centers, and, eventually, on the Company's Web site.
Continuing Sale; Tracking of Inventory. Once an event is on sale,
there are a host of features that provide an operator with an enhanced
ability to make a sale. Events can be found by searching by the date or
date range of the performance or by key words in the ticket text. Once the
event code is entered,
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seating within events can be selected by a variety of attributes such as
location or ticket price. These attributes can also be combined, such as a
request for balcony center seats at a particular price.
Tickets, whether for a single event or multiple events, can be
selected on a best available seat basis or a specific seat basis. On a best
available seat basis, the computer will select the best seats requested by
the operator based on a comprehensive set of rules determined by the client
during the master seating chart and event creation process. On a specific
seat basis, the operator can look at a map of the seats that are available
in a requested section. Each available or open seat is shown on the map,
while a seat that is not available does not appear.
The inventory tracking capabilities also provide a facility or
promoter with the ability to monitor, on a real-time basis, the progress of
the sale of tickets for a particular event. This capability enhances the
ability of a facility or promoter to determine whether to add additional
dates for the event in order to satisfy demands.
Mastersearch. Mastersearch is specifically designed to streamline the
process of fulfilling requests for performances in a series of events.
Based upon the customer's specifications, mastersearch executes a rapid
search and finds the best available seats for the requested performances.
For example, the system can quickly give the customer a choice of the first
three events that have the best pair of seats available in the lower
concourse for a Wednesday performance during the month of December.
Reports. All standard reports are online and are updated at the time
each transaction occurs. There is a system of checks and balances that
verifies data accuracy based on sales by event, compared to sales by
operator. The Ticketmaster System produces numerous reports relative to
ticket sales, monies collected and event status.
Ancillary Box Office Features. Online credit card authorization is a
feature offered to selected facility box offices. Typical time to authorize
a transaction is less than two seconds, and a charge slip can be printed on
blank ticket stock along with the customer's event tickets. The box office
can print a report that verifies the deposit processed by the authorizing
bank.
Closing the Event. At the conclusion of the event, the box office can
take the event off-sale so that it is impossible for tickets to be sold or
returned. Final reports are then prepared. An event can remain on the
system indefinitely, but past events are normally archived on file copy
disks and deleted from the system.
STRATEGY AND GROWTH OPPORTUNITIES
The Company believes that its principal business, live entertainment
ticketing, will experience growth as a result of increased revenues under
existing venue contracts and increased general interest in and attendance at
live entertainment events. The Company, through its Managed Businesses, sold
53.1 million tickets in fiscal 1996 and 30.4 million tickets during the first
six months of fiscal 1997. The Company believes that significant opportunities
exist through continued penetration of this principal market. Additionally,
management believes that further ticketing opportunities will arise from the
construction of new and larger facilities, the increase in the number of
professional sports teams and the development of new sports leagues.
Furthermore, the Company plans to continue to broaden its client base to include
such venues as museums, zoos, amusement parks, state and county fairs and other
locations such as golf courses, ski resorts and trade shows.
The Company also believes that significant opportunities exist
internationally to attract additional venues in a historically under-penetrated
market for ticketing services. In addition, the continued enthusiasm for soccer
and growing popularity of major American sports such as football, baseball and
basketball should lead to increased utilization of these international venues
and provide additional revenue opportunities. In order to be in a position to
capitalize on these trends, the Company expects to expand its existing
operations in the U.K., Australia and, through a new joint venture, in Mexico,
and is exploring further opportunities in Europe, the Pacific Rim and Central
and South America.
The Company is continuing to leverage its widely recognized brand name and
extensive distribution capabilities by developing new opportunities in related
areas, such as entertainment information and
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publishing, merchandising, advertising, promotional services and direct
marketing. Specific examples of its efforts include offering integrated brand
management and marketing services to strategic partners, such as MasterCard
International and Sprint Communications, through sponsorship, advertising
opportunities during live events, during telephone ticketing services, on its
ticket stock and envelopes, on event promotional material and in additional
media outlets which the Company is developing. In addition, the Company recently
launched Live!, a monthly entertainment magazine and event guide which the
Company believes is a natural extension of its existing distribution channels.
The Company has also recently launched Ticketmaster
Online(http://www.ticketmaster.com), its site on the World Wide Web designed to
promote ticket sales for live events, disseminate event information and
ultimately offer transactional and merchandising services. These efforts to
create new promotional, marketing and distribution opportunities by utilizing
and integrating the Company's traditional core ticketing services and brand name
have formed the basis for new growth opportunities in the future.
Expand Domestic Ticketing Business. The Company believes that its domestic
ticketing business will experience growth as a result of increased revenues
under existing venue contracts and increased general interest in and attendance
at live entertainment events. The Company believes that significant
opportunities exist through continued penetration of this principal market. With
its broad distribution capabilities, the Company is strategically positioned to
benefit from any expansion of the live entertainment business. This expansion is
expected to come, in part, from an increase in the total number of tickets sold
by the facilities the Company currently services, due to an increase in the
number and variety of events presented at these facilities. In addition, the
Company intends to enter geographic territories where it does not presently
operate and seeks to enter into contracts with new, as well as existing,
facilities in the areas it currently operates. The Company also believes that
the Ticketmaster System can enhance ticket sales for any event which is time
and/or date sensitive. As a result, the Company is pursuing additional contracts
with state and county fairs, museums, zoos, amusement parks, golf courses, ski
resorts and trade shows. The Company also seeks to service special events. The
Company was the exclusive provider of ticketing services for the 1994 World Cup,
Woodstock 1994 and the European soccer championships.
Further Develop International Ticketing Business. The international
automated ticketing industry is in the early stages of development. Unlike in
the U.S., tickets in Europe are generally sold through ticket brokers which are
required by facilities and event promoters to purchase a specified quantity of
pre-printed tickets for resale to the public. Currently, in Europe neither event
promoters, facilities nor ticket brokers typically use a centralized automated
ticketing system to track ticket inventory or to print tickets. Therefore, a
promoter must allocate ticket inventory among its various brokers, who likewise
must allocate their inventory among their outlets. The Company believes that
there is an opportunity to replace this highly inefficient distribution process.
Pursue Integrated Marketing and Joint Promotion Agreements. Integrated
marketing programs with strategic partners like MasterCard International and
Sprint Communications have created new business opportunities for the Company.
These programs are designed to provide access to entertainment related
opportunities, information and merchandise through traditional and new media,
thus benefitting the Company's strategic partners and clients. This type of
arrangement is attractive to entities seeking to reach a specific audience by
using the Company's unique marketing assets which include its brand name, user
database, distribution network and fulfillment capabilities. In other instances,
traditional promotion and marketing programs have been created with companies
such as Ford Motor Co., Calvin Klein Cosmetics Company and Honda America, Inc.
Implement Promotional and Merchandising Programs. Ticketmaster has the
ability to create specific promotional programs for its clients and for
advertisers such as printed advertising on ticket backs and envelopes,
customized inserts and coupons in ticket mailings, taped messages to callers on
hold, advertising in the Live! magazine and Ticketmaster Online and direct mail
campaigns. These promotional programs can be directed to the public generally,
to ticket purchasers or to those who call the Company for event information.
Ticketmaster's database of consumer information obtained through telephone sales
represents a large source
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of entertainment consumers in the U.S., containing over 20 million active names.
This database presents the opportunity to conduct direct-mail campaigns that can
be targeted by specific event, event type (e.g., sports, concerts, family
attractions and performing arts), facility, zip code or other criteria.
The Company currently sells various products to ticket purchasers who call
the call centers. Typically, at the conclusion of a confirmed ticket purchase, a
call center operator offers to sell merchandise that is related to a particular
event, such as videos, tour merchandise and sports memorabilia. The Company
intends to expand the types and range of merchandise that can be ordered by
telephone. In addition, the Company is exploring opportunities to use its call
centers to gather information from callers as a research service for interested
parties.
Further Develop Live! Magazine. In February 1996, the Company published the
first issue of Live!, a monthly, advertiser-supported entertainment magazine.
The magazine includes interviews, articles and features covering the entire
world of entertainment. Monthly contributors to the magazine currently include
Neil Simon, Carrie Fisher, Pat O'Brien and Robert Palmer. Each issue includes a
pullout Entertainment Guide listing events for which tickets are on sale through
Ticketmaster. The magazine is customized on a regional basis, with the
Entertainment Guide highlighting events scheduled to occur within each region.
The Company derives revenue from magazine sales, the sale of advertisements
and related revenue-generating opportunities. The Company expects to increase
subscription levels through traditional means, as well as by actively selling
subscriptions through its call centers. The magazine is also distributed through
newsstands. The first nine issues of the magazine have had an aggregate of 259
advertising pages.
Maximize Web Site and Internet Opportunities. Ticketmaster Online was
initially developed as a key link between the Company's clients and the ticket
buying public. Information is currently available through a national database
with details on more than 1,100 venues (including over 600 with seating charts),
and weekly listings of all events available and sale dates.
As it now exists, Ticketmaster Online provides advertisers with a new media
platform from which they can present their product or service. However, as the
Internet develops into a mass market for online commerce, the Company believes
that its Web site will present a natural extension for convenient cost-effective
access to tickets, merchandise and information. Further development of promotion
and sponsorship opportunities should also follow as usage of the Web site
increases.
Expand System Sales. The Company is a leading supplier of stand-alone
automated general admission ticketing systems in the U.S., the U.K. and other
worldwide locations. Customers for such systems include movie theaters and other
general admission facilities, such as amusement parks, zoos and museums. The
Company's ticketing systems are currently in use at approximately 4,000 movie
theaters worldwide, with an aggregate of approximately 18,000 movie screens,
which includes approximately 1,800 domestic movie theaters, with an aggregate of
approximately 13,000 movie screens, or approximately 50% of all movie screens in
the U.S.
The Company also provides automated concession sales and control systems to
movie theaters, stadiums, arenas and general admission facilities. Many
facilities have antiquated or no central inventory control system for concession
sales. The Company's automated concession system enables a facility to monitor
on a real time basis inventory sales throughout its facility, and thereby manage
and supervise sales more effectively.
The Company has recently redesigned its general admission ticketing system
and its concession sales and control system and is beginning to market these
improved systems both domestically and internationally. The Company believes
that the improvements made to its ticketing and concession systems will lead to
increased sales of such systems both domestically and internationally. In
addition, the Company intends to increase sales of its concession system, in
part by leveraging relationships with facilities in the U.S. for which the
Company currently provides ticketing services.
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Other. The Company intends to organize membership programs that will
provide its members with certain benefits centered around entertainment, leisure
and travel activities. Membership will also include participation in promotional
and other activities not generally available to the public. The Company also
intends to develop further Ticketmaster Travel, its travel agency which
commenced operations in November 1995.
INDUSTRY OVERVIEW
The Company believes that since a small percentage of all tickets for live
entertainment events sold in the U.S. during fiscal 1996 were sold through
retail outlet networks, call centers and online services operated by automated
ticketing service companies, the domestic market represents a growth
opportunity.
The use of automated ticketing is generally in an earlier stage of
development outside of the U.S., although the actual level of use varies greatly
from country to country. While the Company believes that there is substantial
potential for international growth, the timing and rate of penetration within
each international market will vary.
The supply of tickets, both domestically and internationally, has increased
in recent years by virtue of, among other factors, increases in the number of
facilities (e.g., construction of amphitheaters), facility size and seating
capacity, event expansion into new market areas (e.g., the increase in the
number of professional sports teams and the development of new sports leagues)
and increases in the number of performances of an event (e.g., the adoption of
lengthened regular season play and expanded post-season play by sporting leagues
and associations). Ticket supply has also been enhanced by the desire of, and
necessity for, facilities to continually present as many revenue-producing
events as possible in order to meet their financial and other obligations. In
recent years, the public's increased demand for tickets to certain entertainment
events has been evidenced by its willingness to pay higher ticket prices to
attend entertainment events and the spread of public interest in certain types
of events beyond customary boundaries (e.g., increased worldwide interest in
football, baseball and basketball). In addition to live entertainment events
held at arenas, amphitheaters, stadiums and performing arts venues, automated
ticketing has expanded into servicing ticket issuing facilities that do not
generally have seats (e.g., museums, zoos, amusement parks, state and county
fairs, golf courses, ski resorts and trade shows).
The success of automated ticket service companies depends on their ability
to develop and maintain relationships with facilities, sports teams and
promoters by providing high quality service as well as the availability of, and
public demand for, tickets for all types of events, including sports, family
entertainment, concerts, fine arts and cultural attractions.
COMPANY HISTORY
Ticketmaster Corporation, the Company's principal subsidiary, was organized
in 1976 for the primary purpose of developing stand-alone automated ticketing
systems for sale to individual facilities. Ticketmaster Corporation initially
derived its revenues solely from the sale and installation of equipment and
ongoing royalties and service fees, but was not involved in the actual process
of selling tickets to the public. In the fall of 1982, Ticketmaster Corporation
began its transformation from a seller of stand-alone systems to a service
provider. Ticketmaster Corporation's growth and success resulted from combining
an integrated ticket inventory control management system (which permitted
season, subscription, group and individual tickets to be handled on one system)
with extensive distribution capabilities. In addition, by establishing revenue
sharing arrangements similar to those employed by food service and other
concessionaires to the facilities, Ticketmaster Corporation provided the
facilities with a new source of revenue.
Historically, the Company expanded both internally and through joint
ventures and acquisitions. During the 1980s and the early 1990s, the Company
formed four principal domestic joint ventures covering all or parts of Alabama,
Arkansas, Georgia, Indiana, Kentucky, Mississippi, North Carolina, Ohio, Oregon,
South Carolina, Tennessee, Washington and West Virginia to operate ticket
selling services in those states. In addition, the Company selectively licensed
its name and technology to other entities for use in certain regions, including
Northern California, Washington, D.C., Philadelphia and parts of Canada and
Mexico.
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During the early 1990s, the Company continued to expand both through
acquisitions and strategic alliances with joint venture partners, including, in
1991, the acquisition of certain assets (principally client contracts) of
Ticketron, which previously had been one of the Company's major competitors; in
1992, the formation of a joint venture with an affiliate of Warner Music Group,
Inc. to pursue automated ticketing opportunities in European markets; and in
1994, the formation of a joint venture with an affiliate of Wembley plc to
provide advance ticketing for movie theaters worldwide and to market general
admission ticket selling and concession control systems to various clients,
including movie theaters, stadiums, arenas and amusement parks. Recently, the
Company has begun to reacquire certain of the rights to use the Company's name
and the Ticketmaster System that had previously been granted to joint ventures
and to licensees. See "-- Joint Ventures and Licensees."
As of July 31, 1996, the Company had expanded its ticket distribution
network into 44 states domestically and five countries worldwide.
JOINT VENTURES AND LICENSEES
In addition to the ticketing operations performed directly by the Company,
the Ticketmaster System is operated in certain territories through joint
ventures and licensees. Included among the Company's current and proposed joint
ventures and strategic alliances are the following:
Domestic Joint Ventures. The Company's live entertainment ticketing
business in certain states is conducted through joint ventures in which the
Company serves as the managing partner. The geographical territory covered by
each joint venture and percentage ownership of the Company are as follows: (i)
the Company owns a 33% equity interest in Ticketmaster-Southeast, which services
Georgia, North Carolina, South Carolina, Birmingham, Alabama, and Chattanooga,
Tennessee; (ii) the Company owns an 80% equity interest in
Ticketmaster-Tennessee, which services parts of Tennessee, Arkansas and
Mississippi; (iii) the Company owns a 50% equity interest in
Ticketmaster-Indiana, which services Indiana, West Virginia, and parts of Ohio
and Kentucky; and (iv) the Company owns a 50% equity interest in
Ticketmaster-Northwest, which services Oregon and parts of Washington. Further,
third parties hold a 20% equity interest in the Company's operating subsidiaries
in Florida and Texas.
On September 12, 1996, the Company entered into a letter of intent to
acquire the 50% equity interest of New East Associates LLC ("New East"), its
partner in Ticketmaster-Indiana, pursuant to which Ticketmaster-Indiana will
purchase newly issued convertible Preferred Stock in exchange for Ticketmaster-
Indiana's promissory note in the principal amount of $27 million.
Ticketmaster-Indiana will distribute the Preferred Stock to New East in complete
liquidation of New East's interest in Ticketmaster-Indiana. Concurrent with the
completion of the Offering, the Preferred Stock will automatically convert into
shares of Common Stock having a value of $27 million, based on the initial
public offering price of the Common Stock in the Offering. In the event the
Offering is not completed prior to either the first anniversary or the second
anniversary of the issuance of the Preferred Stock, the holder of the Preferred
Stock may cause the Company to redeem the Preferred Stock at any time from and
after either the first anniversary or the second anniversary, as the case may
be, for $27 million in cash upon giving 30 days notice of exercise of such
redemption right. The Preferred Stock will accrue dividends at the rate of 10%
per annum, payable quarterly.
Australian Joint Ventures. During 1988, the Company licensed the Victorian
Arts Centre Trust ("VACT") to use the Company's name and the Ticketmaster System
in the Australian states of Victoria and Tasmania and in the Australia Capitol
Territory (collectively, the "Australian Territory"). On December 1, 1995, the
license arrangement was terminated and the Company and VACT formed joint
ventures (the "Australian Joint Ventures") for the purpose of conducting the
Company's live entertainment ticketing business in the Australian Territory and,
possibly, other states in Australia and in New Zealand. The Company has a 50%
interest in and serves as the managing partner of the Australian Joint Ventures.
Concurrent with the formation of the Australian Joint Ventures, VACT contributed
one-half of its previously licensed ticketing business to one of the Australian
Joint Ventures and transferred the remaining one-half of such business to the
Company, and the Company contributed such remaining one-half interest to the
same
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Australian Joint Venture. The Company paid approximately $2.3 million to VACT in
connection with the transfer of such one-half interest by VACT to the Company.
The Australian Joint Ventures' clients include the Victorian Arts Centre,
the National Tennis Centre, the Melbourne Cricket Grounds, the Australian Grand
Prix and the Olympic Park. During fiscal 1996, VACT, as licensee, and the
Australian Joint Ventures sold, in the aggregate, approximately 2.4 million
tickets.
Latin American Joint Venture. On June 20, 1996, the Company and Corporacion
Interamericana de Entretenimiento, S.A. de C.V. ("CIE") entered into a letter of
intent to form a joint venture (the "Latin American Joint Venture") for the
purpose of marketing and operating the Ticketmaster System throughout Central
and South America. CIE is currently the owner of a 73% equity interest in the
Company's Mexican licensee (and, after the transaction described under " --
Foreign Licensees," a 50% equity interest). The Company will have a 50% interest
in and serve as the managing partner of the Latin American Joint Venture.
Domestic Licensees. The Company has selectively licensed its name and
technology to third parties for use in areas of Northern California, Oklahoma,
Oregon, Maryland and in Washington, D.C. and certain other cities. The Company
derives revenues from the licensees in the form of license fees and/or ongoing
per ticket royalties. Less than 1% of the Company's total revenues during fiscal
1996 were derived from these license arrangements. Some of the Company's license
agreements continue indefinitely while others have scheduled expirations ranging
from December 1997 to June 2001. Certain of the license agreements are renewable
at the option of the licensee.
On August 7, 1996, the Company entered into a letter of intent to acquire
the license rights and related assets of its Delaware Valley (Philadelphia)
licensee in consideration of $19 million. Such consideration will be paid from
the proceeds of a loan to be obtained by the Company prior to consummation of
the acquisition.
Foreign Licensees. The Company has also selectively licensed its name and
technology to third parties for use in parts of Canada and Mexico. The Company
derives revenues from the licensees in the form of license fees and/or ongoing
per ticket royalties. Less than 1% of the Company's total revenues during fiscal
1996 were derived from these license arrangements. The license agreements have
varying terms with scheduled expirations ranging from May 1998 to May 2001.
On September 19, 1996, the Company entered into a letter of intent to
acquire a 27% equity interest in the Company's Mexican licensee from Ogden
Entertainment Inc. in consideration of $1.8 million in cash and 5% of net
distributions (as defined therein) received with respect to such 27% equity
interest by the Company from the Company's Mexican licensee during the three
year period ending December 31, 1998. In addition, on June 20, 1996, the Company
entered into a letter of intent to acquire an additional 23% equity interest in
the Company's Mexican licensee from CIE in consideration of the Company entering
into the Latin American Joint Venture with CIE. CIE will have general rights of
management with respect to the Company's Mexican licensee.
The Company has recently completed the acquisition, by purchase, redemption
or otherwise, of two former joint venture partners and two former licensees, as
described below:
European Joint Venture. During 1992, the Company and Warner Music
Ticketing, Inc., a subsidiary of Warner Music Group, Inc., formed Ticketmaster
Europe Group (the "European Joint Venture") for the purpose of conducting the
Company's live entertainment ticketing business in substantially all of Europe,
inclusive of the U.K. The Company had a 50% interest in and served as the
managing partner of the European Joint Venture. Concurrent with the formation of
the European Joint Venture, it acquired the operations of the Company's then
licensee in the U.K.
On June 7, 1996, the Company acquired the 50% equity interest of its
partner in the European Joint Venture (and in a related entity) in consideration
of $6 million in cash and an Exchangeable Promissory Note in the principal
amount of $5 million due June 7, 1997 (the "Exchangeable Note"). Upon
consummation of the Offering, the former partner will have the right to exchange
the Exchangeable Note for that number of shares of Common Stock which is equal
to the quotient of (i) the outstanding principal amount of the
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Exchangeable Note on the date of the consummation of the Offering and (ii) the
price to the public of a share of Common Stock pursuant to the Offering.
The Company's clients in the U.K. include Really Useful Group, Maybox
Theatres, Cameron McIntosh and several prominent professional soccer
organizations in the greater London area, all of which had previously been
clients of the European Joint Venture. During fiscal 1996, the European Joint
Venture sold approximately 2.9 million tickets.
Pacer/CATS/CCS Joint Venture. During 1994, the Company and WIL,
Incorporated, a subsidiary of Wembley plc ("WIL"), formed Pacer/CATS/CCS -- a
Wembley Ticketmaster Joint Venture (the "Pacer/CATS/CCS Joint Venture"), for the
purpose of designing, selling and servicing, worldwide other than in Israel, (i)
automated ticketing systems for use by motion picture theaters; (ii) automated
concession sales and control systems for use by motion picture theaters,
stadiums, arenas, amusement parks and other facilities; and (iii) automated
general admission ticketing systems for use by ticket-issuing facilities that do
not generally have seats (e.g., amusement parks, zoos and museums). The Company
had a 50% interest in and served as the managing partner of the Pacer/CATS/CCS
Joint Venture. On July 29, 1996, the Company acquired the remaining 50% interest
in the Pacer/CATS/CCS Joint Venture from WIL and the name of the operating
entity was changed to Pacer/CATS/CCS. Consideration paid by the Company in
connection with the formation of the Pacer/CATS/CCS Joint Venture and the
acquisition of WIL's 50% interest in the Pacer/CATS/CCS Joint Venture aggregated
approximately $16 million in cash and the assumption of $7.5 million of debt.
The automated ticketing and concession sales and control systems are
currently in use at 4,000 movie theaters worldwide, with an aggregate of
approximately 18,000 movie screens, including theaters operated by AMC Theaters,
Cineplex Odeon, General Cinemas, United Artists Cinemas, Warner Bros.
International Theaters, MGM Theaters, UGC, Pathe and UFA Olympia Reich Group,
and in such stadiums and other facilities as Wembley Stadium (U.K.), Cologne Zoo
(Germany), Calgary Saddledome (Canada), CICI Parque (Mexico), and 3Com Park,
Great Western Forum and Veteran's Stadium (U.S.). Pacer/CATS/CCS has recently
begun expansion into the Far East and has completed installations in Japan,
Australia, New Zealand and Singapore.
Prior to the formation of the Pacer/CATS/CCS Joint Venture, Pacer Cats
Corporation (one of the operating subsidiaries of Wembley plc) entered into an
agreement with Promofone, Inc., an affiliate of MovieFone, Inc. ("MovieFone"),
whereby the general admission ticket selling equipment and related computer
interface now owned by Pacer/CATS/CCS would be utilized in connection with
MovieFone's interactive telephone movie ticketing business. The Pacer/CATS/CCS
Joint Venture did not assume or otherwise become a party to that agreement.
Certain disputes have arisen with respect to the interpretation of that
agreement and whether any breaches have occurred thereunder. See "-- Government
Investigations and Litigation."
Domestic Licensees. On February 12, 1996, the Company acquired the license
rights and related assets of its Nashville, Tennessee licensee. In addition, on
August 31, 1996, the Company acquired the license rights and related assets of
its Albuquerque, New Mexico licensee. The aggregate cash consideration for both
acquisitions was $2.0 million.
COMPETITION
Not all facilities, promoters and other potential clients use the services
of a automated ticketing company, choosing instead to distribute their tickets
through their own internal box offices or other distribution channels.
Accordingly, the Company competes with the facilities, promoters and other
potential clients for the right to distribute their tickets at retail outlets,
by telephone and on the Internet. Among those who perform their own ticketing
are Riverfront Coliseum in Cincinnati, the New York Mets, Don Law Presents (Next
Ticketing) and the Shubert Organization (Telecharge).
For those facilities and promoters which decide to utilize the services of
a automated ticketing company, the Company competes with many international,
national and regional ticketing systems, such as Telecharge
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Systems, which is a division of The Schubert Organization, Inc. and licenses the
Ticketron software, Dillards Ticketing Systems, which is a division of Dillard's
Department Stores, Inc. and which uses its own department stores as ticket
outlets, and Destinet (formerly Mistix Corporation). Several of the Company's
competitors have operations in multiple locations throughout the U.S., while
others compete principally in one specific geographic location. One or more of
these regional ticketing systems could expand into other regions or nationally.
Other companies compete with the Company by selling stand-alone automated
ticketing systems to enable the facilities to do their own ticketing, including
companies that sell systems under the names Prologue, Artsoft and Lasergate in
the U.S., Bocs in the U.K. and Softix in Australia, New Zealand and Pacific Rim
countries. The Company has experienced substantial competition for new accounts,
such as 1994 World Cup soccer (which became a client of the Company) and the
National and California Park Systems and the 1996 Summer Olympics (all of which
became clients of one of the Company's competitors). Accordingly, there can be
no assurance that prospective clients will enter into contracts with the Company
rather than the Company's competitors. The Company believes that it competes on
the basis of service provided, capability of the ticketing system, distribution
network, reliability and price. The Company also faces potential competition
from new technology such as online services, interactive television and cable
channels.
As an alternative to purchasing tickets through the Company, ticket
purchasers generally may purchase tickets from the facility's box office at
which an event will be held or by season, subscription or group sales directly
from the venue or promoter of the event. Although processed through the
Ticketmaster System, the Company derives no convenience charge revenue from the
ticket purchasers with respect to those ticket purchases.
TRADEMARKS AND PATENTS
The Company owns a number of registered trademarks in various countries
relating to, among other things, the name Ticketmaster and its related logo. The
Company believes that such trademarks are widely recognized throughout North
America and other parts of the world and have considerable value. The Company is
not aware of any actions against its trademarks used in the ticketing business
and has not received any notice or claim of infringement in respect of such
trademarks.
The Company also acquired the rights to the name Ticketron in connection
with the Company's purchase of certain assets of Ticketron.
The Company presently has no patents pertaining to the Ticketmaster System.
Although the Company may in the future file for patent protection on products
developed or to be developed by it, there can be no assurance that any patents
will be issued or, if issued, that such patents will provide the Company with
meaningful protection. Further, the technology used by the Company in many of
its products is likely to be within the state-of-the-art and may not be more
advanced than the technology used by or available to certain of its present or
potential competitors. The Company may be unable to prevent its competitors and
others from incorporating features of the Company's products into their own
products. See "Risk Factors -- Changing Technology; Absence of Patent
Protection."
REGULATION
The Company is subject to numerous state and local licensing laws and laws
that require the disclosure of specified information to ticket purchasers. In
addition, on February 8, 1996, a bill was introduced in the U.S. House of
Representatives to require ticket distributors (sellers and resellers) to (i)
disclose to a purchaser of an entertainment or sporting event ticket, prior to
any purchase of such ticket, any fee, charge or assessment (other than a tax or
other levy imposed pursuant to Federal, state or local law) to be imposed in
excess of the face amount of the ticket and (ii) have the amount of any such
fee, charge or assessment imprinted on the ticket or on a receipt evidencing any
such ticket sale. These requirements are consistent with existing Company
policy. The bill also includes a provision directing the Federal Trade
Commission to conduct a study of ticketing practices. To date, no hearings have
been held on the bill during the 1996 Congressional session.
The Company is currently regulated by a law in Georgia that establishes
maximum convenience charges on tickets for certain sporting events. Other bills
that could affect the way the Company does business,
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including bills that would regulate the amount of convenience charges, are
introduced from time to time in state and local legislative bodies. The Company
is unable to predict whether any such bills will be adopted and, if so, the
impact thereof on its business.
In addition, increasing concern over consumer privacy has led to the
introduction from time to time of proposed legislation which could impact the
direct marketing and market research industries. The Company does not know when
or whether any such proposed legislation may pass or whether any such
legislation would relate to the types of services currently provided by the
Company or which the Company intends to develop. Accordingly, the Company cannot
predict the effect, if any, that any such future regulation may have on its
business.
Further, the Company is unable to predict, at this time, the effect, if
any, upon the Company's business that may result from the Telecommunications Act
of 1995 and various state telecommunications laws.
GOVERNMENT INVESTIGATIONS AND LITIGATION
The Company received a Civil Investigation Demand in June 1994 from the
Antitrust Division of the United States Department of Justice for the stated
purpose of determining if the Company had violated Sections 1 and 2 of the
Sherman Act. Section 1 of the Sherman Act prohibits contracts, combinations or
conspiracies in restraint of trade. Section 2 of the Sherman Act prohibits any
person from monopolizing, attempting to monopolize or combining or conspiring to
monopolize any part of trade or commerce. On July 5, 1995, the Antitrust
Division issued the following release (which is quoted in its entirety): "The
Department of Justice announced today that it has informed Ticketmaster Holdings
Group, Inc., that it is closing its antitrust investigation into that firm's
contracting practices. The Department will continue to monitor competitive
developments in the ticketing industry."
During 1994, the Company was named as a defendant in 16 federal class
action lawsuits filed in United States District Courts purportedly on behalf of
consumers who were alleged to have purchased tickets to various events through
the Company. These lawsuits alleged that the Company's activities violated
antitrust laws. On December 7, 1994, the Judicial Panel on Multidistrict
Litigation transferred all of the lawsuits to the United States District Court
for the Eastern District of Missouri (the "District Court") for coordinated and
consolidated pretrial proceedings. After an amended and consolidated complaint
was filed by the plaintiffs, the Company filed a motion to dismiss and, on May
31, 1996, the District Court granted that motion ruling that the plaintiffs had
failed to state a claim upon which relief could be granted. On June 12, 1996,
the plaintiffs appealed the District Court's decision to the Court of Appeals
for the Eighth Circuit (the "Court of Appeals") and on August 28, 1996, the
plaintiffs filed their opening brief with the Court of Appeals.
On July 20, 1994, the named plaintiffs in the Florida federal action filed
a complaint in Florida state court essentially asserting the same allegations
that were contained in the then pending federal action. On March 6, 1995, the
Florida state court granted the Company's motion to dismiss the complaint
without prejudice. Plaintiffs have appealed the dismissal.
On March 17, 1995, Moviefone, Inc. and The Teleticketing Company, L.P.
filed a complaint against Ticketmaster Corporation in the United States District
Court for the Southern District of New York. Plaintiffs allege that they are in
the business of providing movie information and teleticketing services, and that
they are parties to a contract with Pacer Cats Corporation to provide
teleticketing services to movie theaters. Plaintiffs also allege that, together
with Pacer Cats Corporation, they had planned to commence selling tickets to
live entertainment events, and that Ticketmaster Corporation, by its conduct,
frustrated and prevented plaintiffs' ability to do so. Plaintiffs further allege
that Ticketmaster Corporation has interfered with and caused Pacer Cats
Corporation to breach its contract with plaintiffs. The complaint asserts that
the Company's actions violate Section 7 of the Clayton Act and Sections 1 and 2
of the Sherman Act, and that the Company tortiously interfered with contractual
and prospective business relationships. The Company has filed a motion to
dismiss which is fully briefed and undecided.
From time to time, state and local authorities commence investigations or
inquiries with respect to the Company's compliance with applicable consumer
protection, deceptive advertising, unfair business practice
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and other laws. The Company has historically cooperated in and satisfactorily
resolved each such investigation or inquiry.
The Company believes that it has conducted its business in substantial
compliance with all applicable laws, including federal and state antitrust laws.
However, given the status of the foregoing matters and the possibility of future
litigation being brought against the Company, no assurances can be made as to
the effect any of these pending or unasserted matters may have on the Company.
The Company has incurred significant legal expenses in connection with
investigations and lawsuits and may incur additional significant legal expenses
in the future should investigations or lawsuits be instituted.
The Company is involved in various other litigation and claims arising out
of or related to the normal conduct of its business. In the opinion of the
Company, none of these proceedings will have a material adverse effect on its
results of operations or financial condition.
PROPERTIES
The Company leases its principal offices in Los Angeles, California, as
well as office space in additional cities throughout the U.S., the U.K., Germany
and France and, through joint ventures, in Australia. The Company currently has
approximately 370,000 square feet of space under lease, with scheduled
expirations ranging from January 1997 to May 2007.
The Company has entered into an agreement to purchase a new building to
serve as its corporate headquarters and the principal offices for Live! magazine
and Ticketmaster Online.
EMPLOYEES
As of January 31, 1996, the Company employed approximately 1,370 full-time
employees, approximately 130 part-time administrative employees and
approximately 3,350 part-time telephone operators. Persons operating the call
centers in Mexico are under contract with the Company's Mexican licensee and are
not employed by the Company.
The telephone operators in New York City and Chicago and the telephone
operators employed by the Australian Joint Ventures (approximately 14.0% of the
Company's telephone operators) are the only employees of the Company covered by
collective bargaining agreements. The collective bargaining agreements covering
the telephone operators in New York City, Chicago and Australia are scheduled to
expire on April 30, 1997, December 31, 1997, and December 1, 1997, respectively.
The Company believes that its relations with its employees are good.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
TICKETMASTER GROUP, INC.
The directors and executive officers of Ticketmaster Group, Inc. are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- -------------------------------------------
<S> <C> <C>
Paul G. Allen 43 Chairman of the Board
Fredric D. Rosen 52 Director, President and Chief Executive
Officer
Charles Evans Gerber(1) 54 Director
David E. Liddle(2) 51 Director
John A. Pritzker(2)(3) 43 Director
William D. Savoy(1)(2) 32 Director
Terence M. Strom(1) 52 Director
Ned S. Goldstein 41 Senior Vice President and General Counsel
Peter B. Knepper 47 Senior Vice President and Chief Financial
Officer
Stuart W. DePina 35 Vice President -- Finance and Treasurer
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Mr. Pritzker serves on the Board of Directors as the designee of certain
existing shareholders of the Company (other than Paul G. Allen) pursuant to
a right granted to those shareholders in an existing shareholders'
agreement. See "Certain Transactions."
Paul G. Allen has served as a director and Chairman of the Board since
December 1993. Since January 1991, Mr. Allen has been a private investor with
interests in a wide variety of companies, many of which focus on multimedia
digital communications such as Asymetrix Corp., Starwave Corporation and
Interval Research Corporation, of which Mr. Allen is the controlling shareholder
and a director. In addition, Mr. Allen is the Chairman of the Board of Trail
Blazers Inc., of the National Basketball Association, and The Paul Allen Group,
a venture capital firm. Mr. Allen currently serves as a director of Microsoft
Corporation and also serves as a director of various private corporations.
Fredric D. Rosen has served as a director since January 1991. Mr. Rosen has
served as the President and Chief Executive Officer since December 1993, and
served as the Chairman of the Board from January 1991 until December 1993. In
addition, since January 1991, Mr. Rosen has served as an executive officer of
numerous subsidiaries of the Company, including Ticketmaster Corporation,
Ticketmaster Ticketing Co., Inc. and Ticketmaster Publications, Inc.
Charles Evans Gerber served as a director of the Company from January 1993
through December 1993 and then was re-elected as a director in September 1994.
Since January 1991, Mr. Gerber has been a senior partner at the law firm of
Neal, Gerber & Eisenberg. Mr. Gerber is a director of Little City Foundation, a
not-for-profit corporation, and various privately-held corporations, and a
former member of the Board of Visitors of the University of Illinois College of
Law.
David E. Liddle has served as a director since September 1994. Mr. Liddle
has served as Chief Executive Officer of Interval Research Corporation, a
research and development company, since March 1992. From November 1991 until
March 1992, Mr. Liddle was a Vice President of IBM Corporation. From January
1991 to October 1991, Mr. Liddle was Chief Executive Officer of Metaphor, Inc.,
a company involved in the computer and software industry. Mr. Liddle currently
serves as a director of Sybase, Inc., Borland International, Inc., Broderbund
Software, Inc. and Netframe Systems Corp., all of which are involved in the
computer and/or software business.
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John A. Pritzker has served as a director since July 1992. Since January
1991, Mr. Pritzker has served as the Chief Executive Officer of the Red Sail
Companies which provide ad specialty and catalogue fulfillment services and
operate water sports and retail facilities at resorts worldwide. Mr. Pritzker is
a director of International Flight Technologies, Inc. and a trustee of the U.S.
Ski Team Foundation, San Francisco Museum of Modern Art, San Francisco Day
School and Children Now.
William D. Savoy has served as a director since September 1994. Mr. Savoy
has served as the President of Vulcan Northwest Inc., a venture capital firm,
since January 1991. Mr. Savoy is a director of c/net, Inc., Harbinger
Corporation, Telescan, Inc. and U.S. Satellite Broadcasting, Inc.
Terence M. Strom has served as a director since September 1994. Mr. Strom
has served as the President and Chief Executive Officer of Egghead, Inc., a
retail software reseller, since June 1993. From July 1989 until June 1993, Mr.
Strom was a Vice President -- Merchandising and Senior Vice President of Best
Buy Company, Inc., a discount retail chain.
Ned S. Goldstein has served as Senior Vice President of the Company since
February 1995 and as General Counsel of the Company since January 1991. From
January 1991 until January 1995, Mr. Goldstein also served as a Vice President
of the Company. In addition, since January 1991, Mr. Goldstein has served as an
executive officer of numerous subsidiaries of the Company, including
Ticketmaster Corporation, Ticketmaster Ticketing Co., Inc. and Ticketmaster
Publications, Inc.
Peter B. Knepper has served as Chief Financial Officer and Treasurer of the
Company since January 1991, and as a Senior Vice President of the Company since
February 1995. In addition, since January 1991, Mr. Knepper has served as an
executive officer of numerous subsidiaries of the Company, including
Ticketmaster Corporation, Ticketmaster Ticketing Co., Inc. and Ticketmaster
Publications, Inc.
Stuart W. DePina has served as Vice President -- Finance and Treasurer of
the Company since November 1995. Prior to November 1995, Mr. DePina was employed
by the public accounting firm of KPMG Peat Marwick, LLP serving in various
capacities including, most recently, a partner. In addition, Mr. DePina serves
as an executive officer of various subsidiaries of the Company, including
Ticketmaster Corporation and Ticketmaster Ticketing Co., Inc.
All directors hold office until the annual meeting of the shareholders of
the Company following their election or until their successors are duly elected
and qualified. Officers are appointed by and serve at the discretion of the
Board of Directors.
TICKETMASTER CORPORATION
In addition to certain of the executive officers of the Company named
elsewhere herein, the senior executive officers of Ticketmaster Corporation, a
principal operating subsidiary of the Company, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------- --- ------------------------------------------------
<S> <C> <C>
Robert A. Leonard 63 Senior Executive Vice President
Marc Bension 49 Executive Vice President
Judy A. Black 47 Senior Vice President -- Governmental Relations
Alan Citron 38 Senior Vice President -- New Media
Ann P. Mooney 40 Senior Vice President -- Administration
</TABLE>
Robert A. Leonard has served as Senior Executive Vice President of
Ticketmaster Corporation since April 1994 and served as President of
Ticketmaster Corporation from January 1991 until April 1994.
Marc Bension has served as Executive Vice President of Ticketmaster
Corporation since February 1994. In addition, since February 1994, Mr. Bension
has also served as an officer of various subsidiaries of Ticketmaster
Corporation. From January 1991 until January 1994, Mr. Bension was President of
MCA Concerts, a division of MCA, Inc.
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Judy Black has served as Senior Vice President -- Governmental Relations of
Ticketmaster Corporation since March 1995. From January 1991 until February
1995, Ms. Black was employed by the International Council of Shopping Centers
Government Relations Office, a trade association, initially as a Vice President
and commencing in May 1994 as a Senior Vice President.
Alan Citron has served as Senior Vice President -- New Media of
Ticketmaster Corporation since January 1995. From January 1991 until December
1994, Mr. Citron was employed by The Los Angeles Times, a division of Times
Mirror Co., as a reporter and business writer and, commencing in 1992, as an
assistant business editor in charge of entertainment.
Ann P. Mooney has served as Senior Vice President -- Administration of
Ticketmaster Corporation since February 1995 and as Vice
President -- Administration of Ticketmaster Corporation since January 1991.
TICKETMASTER TICKETING CO., INC.
In addition to certain of the executive officers of the Company named
elsewhere herein, the senior executive officers of Ticketmaster Ticketing Co.,
Inc., a principal operating subsidiary of the Company, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------- --- ------------------------------------------------
<S> <C> <C>
Terry Barnes 45 President and Chief Operating Officer
Eugene Cobuzzi 41 Executive Vice President, Office of President
Donna Dowless 49 Executive Vice President, Office of President
Neal Gunn 48 Executive Vice President, Office of President
Marla Hoicowitz 40 Executive Vice President, Office of President
Claire Rothman 68 Executive Vice President, Office of President
Tim Wood 42 Executive Vice President, Office of President
</TABLE>
Terry Barnes has served as the President and Chief Operating Officer of
Ticketmaster Ticketing Co., Inc. since September 1995. From January 1991 until
August 1995, Mr. Barnes was Vice President and General Manager of numerous
subsidiaries of Ticketmaster Corporation in the Midwest Region.
Eugene Cobuzzi has served as an Executive Vice President of Ticketmaster
Ticketing Co., Inc. since September 1995. Since January 1991, Mr. Cobuzzi has
also served as an officer of various subsidiaries of Ticketmaster Corporation in
the Northeast Region.
Donna Dowless has served as an Executive Vice President of Ticketmaster
Ticketing Co., Inc. since September 1995. Since January 1991, Ms. Dowless has
also served as an officer of various subsidiaries of Ticketmaster Corporation in
the Southeast Region.
Neal Gunn has served as an Executive Vice President of Ticketmaster
Ticketing Co., Inc. since February 1995. From November 1992 until January 1995,
Mr. Gunn was employed by Astrodome USA, a facility operator, as an Executive
Vice President. From January 1, 1991 until October 1992, Mr. Gunn was employed
by Houston Sports Associates, a facilities operator, as an Executive Vice
President.
Marla Hoicowitz has served as an Executive Vice President of Ticketmaster
Ticketing Co., Inc. since September 1995. Since January 1991, Ms. Hoicowitz has
also served as an officer of various subsidiaries of Ticketmaster Corporation in
the Northeast Region.
Claire Rothman has served as an Executive Vice President of Ticketmaster
Ticketing Co., Inc. since September 1995. From January 1, 1991 until June 1995,
Ms. Rothman was employed by Ogden Entertainment Services, a facilities operator,
as the General Manager of the Great Western Forum.
Tim Wood has served as an Executive Vice President of Ticketmaster
Ticketing Co., Inc. since September 1995. Since January 1991, Mr. Wood has also
served as an officer of various subsidiaries of Ticketmaster Corporation in the
Southeast Region.
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TICKETMASTER PUBLICATIONS, INC.
In addition to certain of the executive officers of the Company named
elsewhere herein, the senior executive officers of Ticketmaster Publications,
Inc., a principal operating subsidiary of the Company, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------- --- ----------------
<S> <C> <C>
Carole Ference 57 Publisher
Annie Gilbar 48 Editor in Chief
</TABLE>
Carole Ference has served as the Publisher of Ticketmaster Publications,
Inc. since February 1995. From January 1991 until March 1995, Ms. Ference was
employed by The Hearst Corporation as the Publisher of Connoisseur magazine
(from January 1991 until March 1992) and as the Publisher of House Beautiful
magazine (from April 1992 until January 1995).
Annie Gilbar has served as the Editor in Chief of Ticketmaster
Publications, Inc. since January 1995. From April 1993 until December 1994, Ms.
Gilbar was employed by Time Inc. as the West Coast Bureau Chief of InStyle
magazine. From January 1991 until March 1993, Ms. Gilbar was employed by
American Express Publishing Corp. as the Editor in Chief of L.A. Style magazine.
DIRECTOR COMMITTEES
The Board of Directors has established an Audit Committee and a
Compensation Committee. Each committee is composed of at least two independent
directors who together constitute a majority of each committee. See
"Management -- Directors and Executive Officers."
The functions of the Audit Committee are to recommend annually to the Board
of Directors the appointment of the independent public accountants of the
Company, discuss and review the scope and the fees of the prospective annual
audit and review the results thereof with the independent public accountants,
review and approve non-audit services of the independent public accountants,
review compliance with existing major accounting and financial policies of the
Company, review the adequacy of the financial organization of the Company and
review management's procedures and policies relative to the adequacy of the
Company's internal accounting controls.
The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for all executive officers (consistent with the
terms of all applicable employment agreements), review, approve and recommend to
the Board of Directors the terms and conditions of all employee benefit plans or
changes thereto and administer the Stock Plan and such other employee benefit
plans as may be adopted by the Company from time to time.
The Board of Directors may also establish other committees from time to
time to assist in the discharge of its responsibilities.
COMPENSATION OF DIRECTORS
Prior to August 21, 1996, directors were not paid fees, but were reimbursed
for travel expenses incurred in attending board and committee meetings. On
August 21, 1996, each director who was not an employee of the Company or the
beneficial owner of 5% or more of the outstanding Common Stock was granted
options to purchase 25,000 shares of Common Stock in consideration for services
rendered through such date. In addition, commencing on August 21, 1996, each
director who is not an employee of the Company or the beneficial owner of 5% or
more of the outstanding Common Stock will be paid an annual fee of $6,000
payable in equal quarterly installments and on the date of each scheduled annual
meeting of the shareholders of the Company, commencing in 1997 and annually
thereafter, each such director will automatically be granted options to purchase
10,000 shares of Common Stock. See "Management -- Stock Plan."
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LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
The Company has adopted provisions in its Amended and Restated Articles of
Incorporation (the "Articles") that, to the fullest extent provided under
Illinois law, limit the liability of its directors and officers for monetary
damages arising from a breach of their fiduciary duties as directors or
officers. Such limitation of liability does not affect the availability of
equitable remedies such as injunctive relief or rescission, nor does it limit
liability for acts of fraud, knowing violation of law, unlawful payment of
distributions. Furthermore, equitable remedies may not, as a practical matter,
be effective for various reasons. The Company's Articles also provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by Illinois law, including circumstances in which indemnification is
otherwise discretionary to the Company under Illinois law. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission (the "Commission") such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
The Company has also agreed to indemnify each director and officer pursuant
to an Indemnity Agreement from and against any and all expenses, losses, claims,
damages and liabilities incurred by such director or officer for or as a result
of actions taken or not taken while such director or officer was acting in his
or her capacity as a director, officer, employee or agent of the Company. In
addition, the Company maintains officers' and directors' liability insurance
which insures against liabilities that officers and directors of the Company may
incur in such capacities. The Company believes that these provisions are
necessary to attract and retain qualified persons as directors and officers.
There is no pending litigation or proceeding involving a director, officer,
employee or agent of the Company where indemnification will be required or
permitted. The Company is not aware of any threatened litigation or proceeding
which may result in a claim for such indemnification.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information with respect to
all compensation paid by the Company during the three fiscal years ended January
31, 1994, 1995 and 1996 to each of the Company's Chief Executive Officer and its
other executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
---------------------------------- UNDERLYING
NAME AND FISCAL OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS SARS COMPENSATION
- --------------------------------------------- ------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Fredric D. Rosen 1996 $1,800,000 $ 679,000 -- $ 12,989(2)
President and Chief 1995 1,800,000 2,156,000 1,331,340 9,476
Executive Officer 1994 925,000 730,000 -- 102
Ned S. Goldstein 1996 $ 250,000 $ 140,000 -- $ 3,695(3)
Senior Vice President 1995 225,000 100,000 70,696 2,681
and General Counsel 1994 170,000 550,000 -- 1,797
Peter B. Knepper 1996 $ 275,000 $ 140,000 -- $ 3,706(4)
Senior Vice President and 1995 245,000 100,000 70,696 2,605
Chief Financial Officer 1994 190,000 550,000 -- 1,559
Stuart W. DePina(1) 1996 $ 45,065 $ 5,000 -- $ 174(5)
Vice President -- Finance and Treasurer
</TABLE>
- ---------------
(1) Mr. DePina became an executive officer of the Company in November 1995.
(2) Represents cash payments for life insurance premiums of $12,989.
(3) Includes $2,329 contributed to the 401K Plan and $1,366 for life insurance
premiums.
(4) Includes $1,790 contributed to the 401K Plan and $1,916 for life insurance
premiums.
(5) Represents cash payments for life insurance premiums of $174.
58
<PAGE> 60
FISCAL YEAR-END OPTIONS/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END
--------------- ---------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
------------------------------------------ --------------- ---------------
<S> <C> <C>
Fredric D. Rosen.......................... 693,406/637,934
Ned S. Goldstein.......................... 47,154/23,542
Peter B. Knepper.......................... 47,154/23,542
Stuart W. DePina..........................
</TABLE>
- ---------------
(1) None of the named executive officers of the Company exercised options or
SARs during the last completed fiscal year. Accordingly, columns in this
table pertaining to the exercise of options/SARs have been omitted.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement, dated as of December 15,
1993, with Fredric D. Rosen for an initial term ending on January 31, 1999.
During the last year of the initial term, the Company and Mr. Rosen have agreed
to negotiate a three-year extension to the employment agreement upon terms and
conditions no less favorable to Mr. Rosen than the terms and conditions
applicable during the last year of the initial term, unless either party gives
notice to the other of its or his desire not to extend the term of the
employment agreement. Pursuant to the employment agreement, Mr. Rosen is
entitled to receive an annual base salary in the amount of $1.8 million
increasing to $2.1 million and $2.3 million, respectively, during the fourth and
fifth years of the initial term. Mr. Rosen is also entitled to receive an annual
performance bonus in an amount equal to a percentage (15% for fiscal 1995, 12.5%
for fiscal 1996 and 10% for all subsequent years) of the excess, if any, of the
Company's consolidated earnings before interest, taxes, depreciation and
amortization, with certain adjustments ("Adjusted EBITDA"), for the relevant
year over (i) for fiscal 1995, Adjusted EBITDA for fiscal 1994; (ii) for fiscal
1996, the average of Adjusted EBITDA for fiscal 1994 and 1995; and (iii) for all
subsequent years, the average of Adjusted EBITDA for the three prior fiscal
years. The annual performance bonus is subject to a cap of 50% of the base
salary for the relevant year if the increase in Adjusted EBITDA for such year
does not exceed specified percentages ranging from 12.5% to 15%. The Company
shall also pay Mr. Rosen such other bonuses as may be granted by the Company's
Board of Directors in its discretion. The employment agreement also entitles Mr.
Rosen to participate in benefit programs, to receive full reimbursement of
medical expenses and to receive a $10 million life insurance policy payable to
Mr. Rosen's estate or named beneficiaries. Pursuant to the employment agreement,
the Company has granted Mr. Rosen options to purchase 1,331,340 shares of Common
Stock at an exercise price of $14.14 per share, 25% of which vested on the grant
date and 75% of which vest monthly on a pro rata basis over a 36-month period
beginning January 1, 1995. If requested by Mr. Rosen, the Company will loan Mr.
Rosen the amount necessary to purchase the shares of Common Stock issuable upon
exercise of the options, together with the amount necessary to pay all Federal
and state income taxes thereon. See "Management -- Executive Compensation." In
addition, Mr. Rosen is prohibited from competing with the Company or soliciting
the employment of any employee of the Company for a period of two years after
termination of Mr. Rosen's employment by the Company (in each case subject to
certain exceptions).
The employment agreement provides that if Mr. Rosen's employment by the
Company is terminated by virtue of Mr. Rosen's death, the Company shall pay to
Mr. Rosen's estate in a lump sum an amount equal to what would have been his
annual base salary for the one-year period following such termination, plus any
annual performance bonus amounts, annual base salary and benefits accrued up to
the date of termination. In the event Mr. Rosen's employment by the Company is
terminated by reason of disability, the Company shall pay to Mr. Rosen an amount
equal to what would have been his annual base salary for the two-year period
following such termination and all annual performance bonus amounts accrued up
to the date of termination,
59
<PAGE> 61
and the Company will for a two-year period continue to provide, subject to
certain conditions, those benefit plans in effect immediately prior to such
termination. If the Company terminates Mr. Rosen's employment for good reason
(which includes a determination by the Board of Directors that Mr. Rosen has
failed to perform his duties) after January 31, 1995, the Company shall pay to
Mr. Rosen in a lump sum an amount equal to what would have been his annual base
salary and amounts payable under benefit plans for the two-year period following
such termination, plus an amount equal to annual performance bonuses, annual
base salary and benefits accrued up to such termination. If Mr. Rosen terminates
his employment for good reason at any time, the Company shall pay him the
amounts described in the immediately preceding sentence over the two-year period
following termination. The Company is also required to gross-up the payments
made to Mr. Rosen for any excise taxes which he may incur as a result of
receiving payments from the Company in connection with a change of control. In
the event the Company terminates Mr. Rosen's employment for any reason, the
Company is obligated to repurchase from Mr. Rosen 306,208 shares of Common Stock
at a purchase price to be determined in the manner set forth in the Shareholders
Agreement described below, but in no event for less than $4.3 million. See
"Certain Transactions."
The Company entered into employment agreements with Ned S. Goldstein and
Peter B. Knepper (as of February 1, 1994) and Stuart W. DePina (as of November
1, 1995), all of which will expire on January 31, 1999 and all of which provide
for negotiation of an extension of the initial term during the last year of the
initial term. Each executive is entitled to receive an annual base salary amount
ranging from $225,000 to $300,000 in the case of Mr. Goldstein, $245,000 to
$310,000 in the case of Mr. Knepper and $200,000 to $240,000 in the case of Mr.
DePina. Each executive is also entitled to receive an annual performance bonus
in an amount determined by the Board of Directors of the Company; provided,
however, that the amount of such bonus for any full contract year shall not be
less than $50,000 in the case of each of Mr. Goldstein and Mr. Knepper and
$20,000 in the case of Mr. DePina. The employment agreements also entitle the
executives to participate in benefit programs, to receive life insurance
policies ($1,000,000 in the case of Messrs. Goldstein and Knepper and $750,000
in the case of Mr. DePina) payable to their estates or named beneficiaries.
Pursuant to the employment agreements (except for Mr. DePina's), the Company has
granted options to purchase shares of Common Stock (70,696 shares in the case of
Messrs. Goldstein and Knepper) at an exercise price of $14.14 per share, vesting
over a 36-month period, in each case under the Company's Stock Plan. See
"Management -- Stock Plan." In addition, the executives are prohibited from
competing with the Company (subject to certain exceptions) or soliciting the
employment of any employee of the Company for a period of two years after
termination of their employment by the Company. Pursuant to the employment
agreements, each executive agrees to serve without further compensation as an
officer or a director of any of the Company's domestic and foreign subsidiaries
and affiliates if elected or appointed thereto.
If the Company terminates the employment of any of the persons named in the
immediately preceding paragraph for any reason other than for cause, death or
disability, the Company shall pay to such executive his or her annual base
salary and minimum annual performance bonus for the remainder of the term of the
employment agreement, subject to certain mitigation and other requirements. For
a two-year period following termination of employment for any reason other than
the executive's death, the executive shall be available to the Company as a
consultant. In consideration for such consulting services (and agreements not to
compete and solicit employees and customers) the executives will receive annual
compensation of $30,000 in the case of Messrs. Goldstein and Knepper and $10,000
in the case of Mr. DePina.
STOCK PLAN
General. The Stock Plan was initially adopted by the Company in 1994 and
was amended and restated on August 21, 1996. The Stock Plan provides for the
issuance of up to 3,250,000 shares of Common Stock to employees, directors and
officers of, and consultants to, the Company and permits the Company to grant
(i) Common Stock subject to transfer restrictions ("Restricted Stock"), (ii)
incentive stock options ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), (iii) non-qualified
stock options ("NSOs") ("ISOs" and "NSOs," individually, or collectively,
"Options"), (iv) stock appreciation rights ("SARs"), and (v) phantom stock
awards.
60
<PAGE> 62
Purpose. The purpose of the Stock Plan is to foster the interests of the
Company and its shareholders by enabling employees, directors and officers of,
and consultants to, the Company to acquire a proprietary interest in the Company
and to provide an additional incentive for such persons to promote the success
of the Company's business.
Administration. The Stock Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"), which selects the persons
who will receive grants of awards under the Stock Plan. The Committee is
comprised of two or more outside directors who have not, for at least one year
prior to joining the Committee, received Options, SARs or stock or other
allocations of equity securities under the Stock Plan (except for automatic
annual awards described elsewhere herein and as permitted pursuant to Rule
16b-3(c)(2)(i) of the Securities Exchange Act of 1934, as amended). The Board
appoints the members of the Committee, fills vacancies on the Committee and has
the power to replace members of the Committee with other eligible persons at any
time. The Committee is authorized to make grants under the Stock Plan, to
determine the terms and conditions thereof and to otherwise administer and
interpret the Stock Plan.
Eligibility. Employees, directors and officers of, and consultants to, the
Company and its subsidiaries are eligible to participate in the Stock Plan and
receive grants of awards thereunder. The selection of employees who will receive
grants under the Stock Plan (the "Participants") is in the sole discretion of
the Committee. The aggregate number of shares of Common Stock that may be issued
under Options, as restricted stock or upon which SARs or phantom stock may be
awarded to any Participant may not exceed 500,000.
Exercise Price of Options. The exercise price of any Option granted under
the Stock Plan is set in each case by the Committee; however, the exercise price
of any ISO may not be less than 100% of the fair market value of the shares of
Common Stock subject to the ISO on the date of grant (110% if the ISO is granted
to a greater than 10% shareholder of the Company).
Terms of Options. ISOs granted under the Stock Plan expire upon the earlier
to occur of (i) the date on which the Option is forfeited under the terms of the
Stock Plan (e.g., 100% forfeiture if a Participant's relationship with the
Company is terminated for Cause (as that term is defined in the Stock Plan));
(ii) ten years from the Option Date (as that term is defined in the Stock Plan)
(five years if the ISO is granted to a greater than 10% shareholder of the
Company), (iii) three months after the Participant's termination of employment
for any reason other than death, or (iv) six months after the Participant's
death. The duration of NSOs granted under the Stock Plan are identical to those
of ISOs except that NSOs do not automatically expire ten years after the Option
Date.
Exercise of Awards. Unless the Committee establishes a different vesting
schedule and except with respect to the automatic director Options discussed
below, Options, Restricted Stock, SARs and phantom stock granted or awarded
under the Stock Plan shall become 25% vested after 12 months from the grant or
award date, and shall vest monthly pro rata over a period of 36 months
thereafter. Notwithstanding the foregoing, upon a Change in Control (as that
term is defined in the Stock Plan) all Options, Restricted Stock, SARs and
phantom stock shall become 100% vested and immediately exercisable. If a
Participant's employment with the Company, membership on the Board of Directors
or retention as a consultant terminates, all unvested grants and awards are
forfeited. Under the Stock Plan, upon the exercise of an Option, the optionee
may make payment either in cash, with shares of Common Stock having an aggregate
fair market value on the date of delivery equal to the exercise price, or by
delivery of an irrevocable commitment to use the proceeds of the sale of stock
acquired from exercise of the option. No Common Stock may be delivered upon the
exercise of an Option until full payment has been made for such shares. For
individuals subject to Rule 16b-3, any withholding obligation of the Company
will be satisfied automatically by the automatic withholding of shares of Common
Stock otherwise issuable to the Participant.
Director Options. Each director who is not an employee of the Company or
the beneficial owner of 5% or more of the outstanding Common Stock and who was a
director of the Company on August 21, 1996 shall automatically be granted as of
that date NSOs to purchase 25,000 shares of Common Stock at an exercise price
per share of $14.14 or, if the Company completes the Offering prior to February
21, 1997, the initial public offering price. In addition, commencing with the
date of the annual meeting of the shareholders of the Company scheduled to be
held in 1997, and annually thereafter, each director who is not an employee of
the
61
<PAGE> 63
Company or the beneficial owner of 5% or more of the outstanding Common Stock
shall automatically be granted NSOs to purchase 10,000 shares of Common Stock at
an exercise price per share equal to the fair market value of the shares of
Common Stock on the Option Date. Each automatic director NSO shall be 100%
vested as of the Option Date; provided, however, that such NSO may not be
exercised at any time prior to six months after the Option Date. Automatic
director NSOs shall expire ten years from the Option Date.
Stock Appreciation Rights (SARs). Under the terms of the Stock Plan, the
Committee may, in its discretion, grant naked SARs and/or tandem SARs to
eligible Participants. A tandem SAR is an SAR that is granted in connection with
an Option and is exercisable only if the fair market value of the Company's
Common Stock on the date of surrender exceeds the Option Price of the related
ISO or the fair market value of the Common Stock on the Option Date in the case
of an NSO, and only to the extent that the related NSO or ISO is exercisable. A
Participant who elects to exercise a tandem SAR may surrender the exercisable
portion of related Options and SARs in exchange for a number of shares of Common
Stock determined by a formula in the Stock Plan. A naked SAR is similar to a
tandem SAR but it is not granted in connection with an underlying Option and its
terms are governed by the Participant's SAR agreement.
Phantom Stock. Under the Stock Plan, the Committee may, in its discretion,
award phantom stock to eligible Participants and, in connection therewith, grant
the Participant the right to receive payments equal to dividends paid on the
Common Stock to which the phantom stock relates. Subject to certain terms and
limitations, an award of phantom stock entitles the Participant to surrender all
or part of the vested portion of such stock and to receive from the Company the
fair market value on the date of surrender of the Common Stock to which the
phantom stock relates or, at the Committee's election, shares of Common Stock.
Non-Assignability of Options, SARs and Phantom Stock. Options, SARs and
phantom stock granted under the Stock Plan are not transferable other than by
will or the then applicable laws of descent and distribution. During the
lifetime of a Participant, Options may be exercised only by such Participant or
his or her guardian.
Restricted Stock. In addition to Options, SARs and phantom stock, the
Committee may, in its discretion, make awards of restricted stock to eligible
Participants under the Stock Plan. A Participant may not sell or transfer shares
of restricted stock awarded under the Stock Plan and the shares are subject to
forfeiture in the event of the termination of the Participant's employment with
the Company or membership on the Board of Directors. Notwithstanding the
transfer restrictions, the holder of restricted stock has the right to vote his
or her shares of restricted stock and to receive dividends in the same amount as
dividends paid on non-restricted shares of Common Stock.
Adjustment to Reflect Change in Capital Structure. If there is any change
in the corporate structure or shares of the Company, the Board of Directors has
the authority to make any adjustments necessary to prevent accretion or to
protect against dilution in the number and kind of shares authorized by the
Stock Plan or in the number and kind of shares covered by awards thereunder.
Rights as a Shareholder. No person shall have any rights or privileges of a
shareholder of the Company as to shares subject to an Option granted pursuant to
the Stock Plan until such Option is exercised in accordance with the terms of
the Stock Plan. A Participant who has been granted SARs or phantom stock has no
rights whatsoever as a shareholder with respect to such SARs or phantom stock.
No Right to Employment. Participation in the Stock Plan or any agreement
entered into pursuant thereto does not confer upon any Participant any right to
continue in the employment of the Company or its subsidiaries.
Amendment and Discontinuance. The Board of Directors may, at any time and
from time to time, amend, modify, suspend or terminate the Stock Plan without
the approval of the Company's shareholders, but may not, without such approval,
(i) change the aggregate number of shares of Common Stock reserved for issuance
pursuant to the Stock Plan, except for such adjustments as are permitted under
the Stock Plan, (ii) change the class of eligible individuals who may receive
awards under the Stock Plan, (iii) adopt any amendment affecting the option
price at which Options may be granted or (iv) materially increase benefits
accruing to Participants under the Stock Plan.
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<PAGE> 64
Termination of Stock Plan. The Board of Directors may terminate the Stock
Plan at any time with respect to any shares of Common Stock that are not then
subject to Options or restricted stock. Termination of the Stock Plan will not
affect Participant rights and obligations with respect to awards granted before
such termination.
Miscellaneous. The Stock Plan is not subject to any of the provisions of
the Employee Retirement Income Security Act of 1974, as amended.
Tax Consequences. The following is a brief summary of the principal
anticipated federal income tax consequences of grants under the Stock Plan to
Participants and the Company. This summary is not intended to be exhaustive and
does not describe all federal, state or local tax laws.
Options. ISOs are intended to meet the requirements of Section 422 of the
Code. The fair market value of shares of Common Stock for which any optionee may
be granted ISOs which are exercisable for the first time during any year may not
exceed $100,000. No income results to the holder of an ISO upon the grant of the
option or issuance of shares of Common Stock. The amount realized on the sale or
taxable exchange of such shares of Common Stock in excess of the option price
will be considered a capital gain, except that, if a disposition occurs within
one year after exercise of the ISO or two years after the grant of the ISO, the
optionee will realize compensation (and, subject to the discussion of Section
162(m) of the Code below, the Company will have a deduction), for federal income
tax purposes, on the amount by which the lesser of (i) the fair market value on
the date of exercise or (ii) the amount realized on the sale of the shares of
Common Stock exceeds the option price. For the purpose of determining
alternative minimum taxable income, an ISO is treated as a non-qualified option.
No income results to the holder of an NSO upon the grant of the option. In
connection with the exercise of an NSO, an optionee will generally realize
compensation (and, subject to the discussion of Section 162(m) of the Code
below, the Company will have a deduction), for federal income tax purposes, on
the difference between the option price and the fair market value of the shares
of Common Stock acquired. Special rules govern income recognition by officers
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended.
Stock Appreciation Rights. The grant of an SAR should not give rise to
federal income tax consequences to the Participant or the Company. In the case
of an SAR that becomes exercisable (as opposed to an SAR that merely matures and
is paid out), exercisability alone should not give rise to federal income tax
consequences. Moreover, appreciation in the underlying stock, either before or
after the SAR becomes exercisable, should not trigger tax prior to payout. When
the holder of an SAR exercises the SAR or otherwise receives the payout, the
holder recognizes ordinary income (and, subject to the discussion of Section
162(m) of the Code below, the Company will have a deduction), subject to
withholding, in the amount of the payout. To the extent the payout is made in
shares of Common Stock, the holder's income is measured by the then fair market
value of the shares of Common Stock. The Company will be entitled to withhold
taxes on the value of the payout of an SAR. If the payout is made in shares of
Common Stock, satisfaction of the withholding may be accomplished by reducing
the number of shares of Common Stock to be issued to the employee.
Restricted Stock. Generally, a Participant will not recognize income and
the Company will not be entitled to a deduction with respect to an award of
Restricted Stock until the first to occur of the vesting or the free
transferability of such shares. The amount to be included in the Participant's
income (and, subject to the discussion of Section 162(m) of the Code below,
deductible by the Company) will equal the fair market value of the Restricted
Stock on the first day it is freely transferable or vested, not when it is first
issued to a Participant, over the amount, if any, paid for such stock. The
Company will be entitled to withhold tax from a Participant's salary or from the
shares that are no longer subject to restriction in order to satisfy any tax
withholding obligation arising from the taxability of the Restricted Stock.
A Participant receiving Restricted Stock can elect to include the value of
the Restricted Stock, over the amount, if any, paid for such stock in income at
the time it is awarded by making a "Section 83(b) Election" within 30 days after
the Restricted Stock is transferred to the Participant.
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<PAGE> 65
Phantom Stock. The grant of phantom stock should not give rise to federal
income tax consequences to the Participant or the Company. In the case of a
holding of phantom stock which the Participant can compel the Company to redeem
(as opposed to phantom stock that merely matures and is paid out), the ability
to compel redemption alone should not give rise to federal income tax
consequences. Moreover, appreciation in the underlying stock, either before or
after the phantom stock becomes redeemable, should not trigger tax consequences
to the holder prior to payout. When the holder of phantom stock causes the
phantom stock to be redeemed or otherwise receives the payout, the holder will
realize ordinary income (and, subject to the discussion of Section 162(m) of the
Code below, the Company will have a deduction) subject to withholding, in the
amount of the payout. To the extent the payout is made in shares of Common
Stock, the holder's income is measured by the then fair market value of the
shares of Common Stock. The Company will be entitled to withhold taxes on the
value of the payout of phantom stock. If the payout is made in shares of Common
Stock, satisfaction of the withholding may be accomplished by reducing the
number of shares to be issued to the Participant.
Section 162(m). Section 162(m) of the Code generally disallows a federal
income tax deduction to any publicly held corporation for compensation paid in
excess of $1 million in any taxable year to the chief executive officer or any
of the four other most highly compensated executive officers who are employed by
the Company on the last day of the taxable year. Generally, compensation
attributable to a plan or agreement that is adopted prior to the time a
corporation becomes publicly held will not be subject to the deduction
limitation of Section 162(m) of the Code provided that the prospectus
accompanying the initial public offering discloses information about such plan
or agreement which satisfies all applicable securities laws (the "private
company rule"). Accordingly, compensation attributable to the employment
agreements described above or the Stock Plan may not be subject to such
deduction limitation. See "Management -- Employment Agreements."
Stock Plan Benefits. The following table lists all the Options that have
been granted under the Stock Plan. The Company has not entered into any other
agreements and is not obligated to grant any other Options or make any other
awards under the Stock Plan.
<TABLE>
<CAPTION>
STOCK PLAN
---------------------------------
NUMBER OF
SHARES
UNDERLYING PER SHARE
NAME AND POSITION OPTIONS EXERCISE PRICE
------------------------------------------------ ---------- --------------
<S> <C> <C>
Fredric D. Rosen................................ -- $ --
President and
Chief Executive Officer
Ned S. Goldstein................................ 70,696 $14.14
Senior Vice President
and General Counsel
Peter B. Knepper................................ 70,696 $14.14
Senior Vice President
and Chief Financial Officer
Stuart W. DePina................................ -- $ --
Vice President --
Finance and Treasurer
Executives as a group........................... 141,392 $14.14
(four persons)
</TABLE>
401(K) INVESTMENT SAVINGS PLAN
Effective January 1, 1990, Ticketmaster Corporation, a subsidiary of the
Company, established a 401(k) plan, which was amended and restated effective
October 1, 1994 in the form of the Ticketmaster 401(k) Savings Plan and Trust
(the "401(k) Plan"). The 401(k) Plan is a qualified retirement plan under the
Code. Generally, employees of Ticketmaster Corporation and other related
entities are eligible to participate in the 401(k) Plan once they have attained
age 21 and completed 1,000 hours of service during a calendar year. A
participant in the 401(k) Plan can contribute up to 12% of his or her
compensation to the 401(k) Plan on a pre-tax basis. Ticketmaster Corporation
contributes $0.25 for each dollar of the participant's contributions
64
<PAGE> 66
which are not in excess of 6% of his or her compensation. Participants vest in
Ticketmaster Corporation's contributions according to a four-year schedule, with
25% vesting after one year and 25% additionally each year thereafter.
Participants are fully vested in their contributions regardless of the schedule
and in Ticketmaster Corporation's contributions upon death, disability or
retirement on or after age 55. Participants are eligible to receive distribution
of their vested accounts upon termination of employment for any reason.
Distributions are made in a lump sum payment only. Participants may withdraw
amounts from the 401(k) Plan while they remain employed for reasons of financial
hardship or after they attain age 59 1/2. Participants are allowed to direct the
investment of their accounts under the 401(k) Plan among four broad-based
investment funds, and a combination lifepath fund thereof.
CERTAIN TRANSACTIONS
In addition to the transactions described under "Management -- Employment
Agreements," the Company has had during its last fiscal year, or contemplates
having, the transactions described below.
On December 15, 1993, the shareholders listed in the table under "Principal
Shareholders" entered into a shareholders agreement (the "Shareholders
Agreement") concurrently with the sale of 12,233,014 shares of Common Stock by
the Company to Paul G. Allen. The Shareholders Agreement, among other things,
(i) grants the existing shareholders (other than Mr. Allen) as a group the right
to designate one member for election to the Company's Board of Directors,
subject to the approval of Mr. Allen, which approval will not be reasonably
withheld or delayed, (ii) restricts the ability of Mr. Allen to transfer shares
of Common Stock owned by him other than pursuant to transfers to relatives,
affiliates, charities and other shareholders, pledges and sales pursuant to Rule
144 under the Securities Act ("Rule 144") or a public offering ("Exempt
Transfers"), (iii) restricts the ability of the existing shareholders (other
than Mr. Allen) to sell shares of Common Stock owned by them in a public
offering unless such existing shareholders shall have afforded Mr. Allen the
right of first refusal to acquire such shares, (iv) affords the existing
shareholders (other than Mr. Allen) the right to participate in any sale of
shares of Common Stock by Mr. Allen, other than the sale of shares of Common
Stock by Mr. Allen pursuant to Exempt Transfers, (v) affords Mr. Allen the right
to cause the existing shareholders (other than Mr. Allen) to sell their shares
of Common Stock to a bona fide unaffiliated third person to whom Mr. Allen has
agreed to sell shares of Common Stock where such sale results in Mr. Allen
owning less than 50% of the outstanding Common Stock of the Company, and (vi)
requires Mr. Allen to engage in any business that would otherwise be competitive
with the Company (subject to certain exceptions) through the Company. With
respect to Mr. Allen's right of first refusal to purchase shares of Common Stock
in a transaction of the type described in clause (iii) above, the purchase price
for the purchased shares shall be (if the Company's Common Stock is then
publicly traded) a price equal to the average of the closing prices for such
stock during a specified ten-business-day period. The Shareholders Agreement
shall terminate upon the voluntary agreement of all the parties thereto or at
such time as the existing shareholders (other than Mr. Allen) collectively own
less than 10% of the Common Stock of the Company outstanding as of December 15,
1993. The Shareholders Agreement shall also terminate as to any existing
shareholder when such shareholder owns less than 1% of the Common Stock of the
Company outstanding as of December 15, 1993.
Concurrently with the execution of the Shareholders Agreement, the Company
also entered into a Registration Rights Agreement with Mr. Allen and a
Registration and Exchange Rights Agreement with the existing shareholders other
than Mr. Allen pursuant to which they are granted rights to require the Company,
subject to certain qualifications, to effect the registration under the
Securities Act of all or a specified number of their shares of Common Stock or
have such shares included in a registration statement filed with respect to the
offering of Common Stock by the Company or any other shareholder. The Company
has agreed to bear all expenses relative to such registrations, except fees and
expenses of any counsel for the selling stockholders and the underwriters'
commissions. The existing shareholders (other than Mr. Allen), on the one hand,
and Mr. Allen, on the other hand, shall have no further rights under such
Registration Rights Agreement or such Registration and Exchange Rights
Agreement, as applicable, at any time after either of them fails to own at least
5% of the Common Stock of the Company outstanding as of December 15, 1993.
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<PAGE> 67
On November 18, 1994, Paul G. Allen entered into a Third Party Pledge
Agreement whereby Mr. Allen agreed to secure the Company's payment obligations
with respect to a Term Loan under the Credit Agreement by granting the lenders
thereunder a security interest in shares of publicly traded common stock and/or
investment grade bonds owned by Mr. Allen having an aggregate market value equal
to no less than $90 million or such amount as will cause the ratio of the
outstanding principal amount of the Term Loan to such stock and bonds to equal
no more than 83.33%. See "Description of Certain Indebtedness -- Credit
Agreement."
Pursuant to a Development and Services Agreement currently being documented
(the "Starwave Agreement"), Ticketmaster Multimedia Holdings, Inc. ("TMHI"), a
wholly-owned subsidiary of the Company, retained Starwave Corp. ("Starwave"), an
affiliate of Mr. Allen, to provide consulting, creative, writing, design and
computer programming services in connection with the development of Ticketmaster
branded Web sites and web pages available for informational and retail sales
purposes on the World Wide Web portion of the Internet. In consideration of the
services provided by Starwave under the Starwave Agreement, TMHI has agreed that
during the period beginning with the first commercial online transaction
consummated through the Ticketmaster retail Web site through December 31, 2003,
Ticketmaster will compensate Starwave as follows: (i) royalty payments of 5% of
gross service charge revenues received by Ticketmaster from end users in
connection with online sales of tickets and other merchandise on the
Ticketmaster retail Web site, less certain enumerated deductions, and (ii)
royalty payments of 10% of the net profits of Ticketmaster derived directly from
the online sale of merchandise to end users through the Ticketmaster retail Web
site. Ticketmaster has further agreed to pay Starwave a minimum annual royalty
of $100,000 (prorated for 1996), which amount is credited against amounts
otherwise payable to Starwave pursuant to clauses (i) and (ii). The Board of
Directors of the Company has determined that the terms of the Starwave Agreement
are fair and in the best interests of the Company and its shareholders.
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<PAGE> 68
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the date hereof and as adjusted to
reflect the sale of Common Stock offered hereby, for (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding Common
Stock, (ii) each director of the Company, (iii) the Company's Chief Executive
Officer and each of the executive officers named in the Summary Compensation
Table and (iv) all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING(2)
---------------------- ---------------------
NUMBER OF NUMBER OF
NAME(3) SHARES PERCENT SHARES PERCENT
- -------------------------------------------------- ---------- ------- --------- -------
<S> <C> <C> <C> <C>
Paul G. Allen..................................... 12,233,014 79.9% %
H.G., Inc.(4)..................................... 2,544,526 16.6
Fredric D. Rosen(5)............................... 1,276,977 7.8
Charles Evans Gerber(5)(6)........................ -- *
David Liddle(5)................................... -- *
John A. Pritzker(5)(7)............................ -- *
William D. Savoy(5)............................... -- *
Terence M. Strom(5)............................... -- *
Ned S. Goldstein(5)............................... 66,768 *
Peter B. Knepper(5)............................... 66,768 *
Stuart W. DePina.................................. -- *
All officers and directors as a group (10
persons)(5)..................................... 13,643,527 83.1%
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Unless otherwise indicated in the footnotes to this table, the Company
believes the individuals named in this table have sole voting and investment
power with respect to all shares of Common Stock reflected in this table.
(2) Assumes no exercise of the Underwriters' over-allotment option or any of the
options granted under the Stock Plan or otherwise which are not exercisable
within 60 days of the date hereof.
(3) Unless otherwise indicated, the address of each shareholder is in care of
the Company, 3701 Wilshire Boulevard, 7th Floor, Los Angeles, California
90010.
(4) HG, Inc. is a Delaware corporation, the indirect beneficial owners of which
are various trusts for the benefit of certain members of the Pritzker
family. Excludes 23,438 shares owned by Rockwood & Co., a Delaware
corporation, the common stock of which is indirectly owned by various other
trusts for the benefit of certain members of the Pritzker family. As used
herein, the "Pritzker family" refers to the lineal descendants of Nicholas
J. Pritzker, deceased.
(5) Includes 970,769, 66,768 and 66,768 shares covered by options granted to
Messrs. Rosen, Goldstein and Knepper, respectively, which are currently
exercisable or exercisable within 60 days of the date hereof. Excludes (i)
360,571, 3,928 and 3,928 shares covered by options granted to Messrs. Rosen,
Goldstein and Knepper, respectively, which are not exercisable within 60
days of the date hereof, (ii) 25,000 shares covered by options granted to
each of Messrs. Gerber, Liddle, Pritzker, Savoy and Strom as director
options under the Stock Plan and which are not exercisable within 60 days of
the date hereof and (iii) 493,427 shares covered by options granted to all
officers and directors as a group which are not exercisable within 60 days
of the date hereof.
(6) Does not include shares owned by Rockwood & Co. A nominal indirect
non-voting interest in Rockwood & Co. is owned by various trusts for the
benefit of certain members of the Pritzker family, of which Mr. Gerber is a
trustee.
(7) Does not include shares owned by HG, Inc. and Rockwood & Co.
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<PAGE> 69
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following summaries relating to certain provisions of the indebtedness
of the Company and its subsidiaries do not purport to be complete and are
qualified in their entirety by reference to the various agreements described
herein, copies of which have been filed with the Commission.
CREDIT AGREEMENT
The Company's Credit Agreement (as amended on various occasions) provides
for (i) a revolving loan commitment (the "Revolving Loan") not to exceed $100
million which is available to satisfy debt of the Company and for working
capital and other general corporate purposes provided that (a) the proceeds of
the Revolving Loan borrowed on or after August 28, 1995 ($95.8 million at July
31, 1996) shall be used by the Company for purposes specified therein, including
the making of loans and advances to and investments in the Australian Joint
Ventures and TM Publications, Inc., and (b) as of the close of business on
August 28, 1995, the Revolving Loan shall be permanently reduced by an amount
equal to any excess of the Revolving Loan over $100 million; as of the close of
business on December 31, 1997, the Revolving Loan shall be permanently reduced
by an amount equal to any excess of the Revolving Loan over $90 million; and as
of the close of business on December 31, 1998, the Revolving Loan shall be
permanently reduced by an amount equal to any excess of the Revolving Loan over
$75 million; (ii) a swing line loan commitment (the "Swing Line Loan") not to
exceed $5 million to be used for recoupable client agreement advances and other
working capital purposes; and (iii) a term loan (the "Term Loan") not to exceed
$75 million which was used solely to repay then existing indebtedness of the
Company. Amounts outstanding under the Revolving Loan, the Swing Line Loan and
the Term Loan (collectively, the "Borrowings") are due and payable on December
31, 1999. As of July 31, 1996, $95.8 million, $0 and $75 million were
outstanding under the Revolving Loan, the Swing Line Loan and the Term Loan,
respectively. The Borrowings accrue interest at either the prime rate (8.25% at
July 31, 1996) or the London Inter Bank Offering Rate ("LIBOR") (5.4% at July
31, 1996) plus an applicable margin as defined in the Credit Agreement. At July
31, 1996, all borrowings under the Credit Agreement accrue interest at LIBOR
plus an applicable margin of 1.625%. A portion of the net proceeds of the
Offering will be used to repay a portion of the outstanding indebtedness under
the Credit Agreement. See "Use of Proceeds."
Borrowings under the Credit Agreement are guaranteed by certain of the
Company's subsidiaries and are secured by stock pledges and security interests
granted by the Company and its subsidiaries. In addition, the Term Loan is
secured by a first priority lien granted by a principal shareholder of the
Company in publicly traded common stock having an aggregate market value of no
less than $90 million. See "Certain Transactions."
The Credit Agreement prohibits the Company from declaring or paying any
dividend or distribution, either in cash or any other property (other than stock
dividends or stock splits), on the Company's stock or equity securities then or
thereafter outstanding, and prohibits the Company from redeeming, retiring,
purchasing or otherwise acquiring any shares of any class of the Company's stock
or equity securities then or thereafter outstanding, except as provided in the
Credit Agreement.
PACER/CATS/CCS CREDIT AGREEMENT
On July 31, 1996, Pacer/CATS/CCS ("Borrower") entered into the First
Amended and Restated Credit Agreement, which provides for a loan of $7.5
million. The loan is a consolidation and renewal of a revolving loan and a term
loan extended to Borrower pursuant to the terms of an original credit agreement.
The outstanding principal of the loan bears interest at a rate equal to the
prime rate (8.25% at July 31, 1996) plus 25 basis points per annum. Commencing
on July 1, 1998, Borrower shall have the option to convert the interest rate to
a rate equal to the IBOR Rate (the lender's approximate equivalent of the London
Inter Bank Offering Rate), plus 225 basis points per annum. Borrowings under the
loan are secured by all of Borrower's assets. As a condition to the lender's
agreement to make the loan, Ticketmaster Corporation entered into an Interest
Keep-Well Agreement, which provides generally that Ticketmaster Corporation
shall pay to the lender on demand the amount of any and all interest payment
defaults by Borrower on the loan, not to exceed
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<PAGE> 70
$500,000, during the period which commenced July 31, 1996 and ends on June 30,
1997, or sooner as provided by the credit agreement. See "Business -- Joint
Ventures and Licensees."
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 20,000,000 shares
of Preferred Stock, no par value, and 80,000,000 shares of Common Stock, no par
value. Currently, there are 15,310,405 shares of Common Stock issued and
outstanding and no shares of Preferred Stock issued and outstanding.
The following summary relating to the capital stock does not purport to be
complete. Reference is made to the Articles and the Amended and Restated By-laws
(the "By-laws") of the Company which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part, for a detailed description of
the provisions thereof summarized below.
COMMON STOCK
Holders of Common Stock are entitled to receive such dividends as may from
time to time be declared by the Board of Directors of the Company out of funds
legally available therefor. Holders of Common Stock are entitled to one vote per
share on all matters on which the holders of Common Stock are entitled to vote
and do not have any cumulative voting rights. Holders of Common Stock have no
preemptive, conversion, redemption or sinking fund rights. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share equally and ratably in the assets of the Company, if any,
remaining after the payment of all debts and liabilities of the Company and the
liquidation preference of any outstanding series of Preferred Stock. The
outstanding shares of Common Stock are, and the shares of Common Stock offered
by the Company hereby when issued will be, fully paid and nonassessable. The
rights, preferences and privileges of holders of Common Stock are subject to any
series of Preferred Stock which the Company may issue in the future as described
below.
The By-laws provide that any action that can be taken at a meeting of the
shareholders may be taken by written consent in lieu of a meeting if the Company
receives consents signed by shareholders having the minimum number of votes that
would be necessary to approve the action at a meeting at which all shares
entitled to vote on the matter were present. This would enable the existing
shareholders to take all actions required to be taken by the shareholders
without providing the other shareholders the opportunity to consider and vote on
such matters or raise other matters at a meeting.
The transfer agent and registrar for the Common Stock is
.
PREFERRED STOCK
The Board of Directors is authorized to provide for the issuance of
Preferred Stock in one or more series and to fix the number of shares
constituting any such series, the voting powers, designations, preferences and
relative, participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including the dividend rights, dividend
rate, terms of redemption, redemption price or prices, conversion rights and
liquidation preferences of the shares constituting any series, without any
further vote or action by the shareholders of the Company. The issuance of
Preferred Stock by the Board of Directors could adversely affect the rights of
holders of Common Stock. For example, issuance of Preferred Stock could result
in a series of securities outstanding that would have preferences over the
Common Stock with respect to dividends and in liquidation and that could (upon
conversion or otherwise) enjoy all of the rights appurtenant to the Common
Stock.
The authority possessed by the Board of Directors to issue Preferred Stock
could potentially be used to discourage attempts by others to obtain control of
the Company through merger, tender offer, proxy, consent or otherwise by making
such attempts more difficult to achieve or more costly. The Board of Directors
generally may issue Preferred Stock without shareholder approval and with voting
and conversion rights which could adversely affect the voting power of holders
of Common Stock. There are no agreements or
69
<PAGE> 71
understandings for the issuance of Preferred Stock, and the Board of Directors
has no present intention to issue any shares of Preferred Stock.
In connection with the proposed acquisition of the other joint venture
partner's interest in Ticketmaster-Indiana, the Company plans to issue shares of
Preferred Stock which will automatically convert upon the occurrence of an
initial public offering into Common Stock at the initial public offering price
per share.
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of Illinois law and of the Articles and the By-laws of
the Company summarized above and in the succeeding paragraphs may have
anti-takeover effects and may delay, defer or prevent a tender offer or takeover
attempt that a shareholder might consider to be in such shareholder's best
interest, including those attempts that might result in a premium over the
market price for the shares held by shareholders.
Director Vacancies. The Articles and the By-laws provide that the number of
directors of the Company will be fixed from time to time exclusively by the
Board of Directors and, unless the Board of Directors otherwise determines, a
majority of the directors then in office may fill any vacancies on the Board of
Directors.
Section 11.75 of the IBCA. Section 11.75 of the Illinois Business
Corporation Act of 1983 (the "IBCA") prohibits a corporation from engaging in a
"business combination" with an "interested shareholder" for a period of three
years after the date of the transaction in which the person became an interested
shareholder, unless (i) before such person became an interested shareholder, the
board of directors of the corporation approved the transaction in which the
interested shareholder became an interested shareholder or approved the business
combination, (ii) upon consummation of the transaction which resulted in the
shareholder becoming an interested shareholder, the interested shareholder owned
at least 85% of the voting stock outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
right to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer), or (iii) upon or following the
transaction in which such person became an interested shareholder, the business
combination is approved by the board of directors of the corporation and the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested shareholder. A "business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
the interested shareholder. Generally, an "interested shareholder" is a person
who, together with affiliates and associates, owns, or within three years prior
to such transaction did own, 15% or more of the corporation's voting stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have shares of
Common Stock outstanding ( if the over-allotment option is exercised in
full). Of these shares, the shares to be sold in the Offering will be
freely tradable without restriction or further registration under the Securities
Act unless purchased by "affiliates" of the Company, as that term is defined in
Rule 144 described below. The remaining shares of Common Stock outstanding
after completion of this offering (all of which are owned by the existing
shareholders) are "restricted securities" and may not be sold in a public
distribution except in compliance with the registration requirements of the
Securities Act or an applicable exemption under the Securities Act, including an
exemption pursuant to Rule 144 or Regulation S thereunder. Restricted securities
are eligible for sale in the public market pursuant to Rule 144 no sooner than
two years from the date of acquisition.
The directors, officers and shareholders of the Company have agreed with
the Underwriters not to offer to sell, contract to sell or otherwise sell or
dispose of any shares of Common Stock for a period of 180 days after the date of
this Prospectus without the consent of Allen & Company Incorporated acting on
behalf of the Underwriters, except for certain stock repurchases that may be
required pursuant to employment agreements. Persons who may receive shares of
Common Stock in connection with certain of the completed and proposed
70
<PAGE> 72
acquisitions have also agreed to be bound by similar restrictions. Upon
expiration of this period, of the shares owned by the existing shareholders
will be immediately eligible for sale in the public market subject to the
limitations of Rule 144. The remaining shares owned by the existing
shareholders will be immediately eligible for resale in the public market
subject to the limitations of Rule 144 on , 1998. See "Certain
Transactions."
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least two
years (including the holding period of any prior owner except an affiliate) is
entitled to sell in "broker's transactions" or to market makers, within any
three-month period commencing 90 days after the date of this Prospectus, a
number of shares that does not exceed the greater of (i) 1% of the number of
shares of Common Stock then outstanding (approximately shares immediately
after the Offering) or (ii) generally, the average weekly trading volume in the
Common Stock during the four calendar weeks preceding the required filing of a
Form 144 with respect to such sale. Sales under Rule 144 are also subject to
certain notice requirements and the availability of current public information
about the Company. Under Rule 144(k), a person who is not deemed to have been an
affiliate of the Company at any time during the three months preceding a sale
and who has beneficially owned the shares proposed to be sold for at least three
years is entitled to sell such shares without having to comply with the manner
of sale, public information, volume limitation or notice provisions of Rule 144.
In addition, any employee, officer or director of or consultant to the
Company who purchases his or her shares pursuant to a written compensatory plan
or contract may be entitled to rely on the resale provisions of Rule 701. Rule
701 permits affiliates to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. Rule 701 further
provides that non-affiliates may sell such shares in reliance on Rule 144
without having to comply with the public information, volume limitation or
notice provisions of Rule 144.
Following the Offering, the Company intends to file under the Securities
Act a registration statement on Form S-8 to register all of the shares of Common
Stock subject to outstanding options and reserved for future option grants under
the Stock Plan. That registration statement is expected to become effective upon
filing and shares covered by that registration statement will be eligible for
sale, subject, in the case of affiliates only, to the restrictions of Rule 144,
other than the holding period requirements, and subject to expiration of the
lock-up agreements with the Underwriters.
In addition, at any time following the expiration or termination of the
aforesaid 180-day "lock-up" period, certain of the existing shareholders will
have the right, pursuant to existing agreements, to require the Company, subject
to certain qualifications, to effect the registration under the Securities Act
of all or a specified number of their shares of Common Stock, or to participate
in such registrations. See "Certain Transactions."
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<PAGE> 73
UNDERWRITING
The Underwriters named below, for whom Allen & Company Incorporated, Lazard
Freres & Co. LLC and Smith Barney Inc. are acting as representatives (the
"Representatives"), have severally agreed, subject to the terms and conditions
contained in the underwriting agreement (the "Underwriting Agreement"), to
purchase from the Company, and the Company has agreed to sell to the
Underwriters, the aggregate number of shares of Common Stock set forth opposite
their respective names below:
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
------------------------------------------------------------------ ---------
<S> <C>
Allen & Company Incorporated......................................
Lazard Freres & Co. LLC...........................................
Smith Barney Inc..................................................
--------
Total...................................................
========
</TABLE>
Pursuant to the Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions therein, to purchase all of the
shares offered hereby (other than shares that may be purchased under the
over-allotment option) if any are purchased. The Underwriters propose initially
to offer the shares to the public at the public offering price set forth on the
cover page of this Prospectus. The Underwriters may allow a selling concession
not in excess of $ per share to certain dealers. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $
per share to certain dealers. The public offering price and concessions may be
changed by the Representatives after the initial public offering.
The Company has granted to the Underwriters an option, expiring 30 days
after the date of the Underwriting Agreement, to purchase up to an additional
shares of Common Stock at the public offering price, less underwriting
discounts and commissions, all as set forth on the cover page of this
Prospectus. The Underwriters may exercise the option only to cover
over-allotments, if any, in the sale of shares of Common Stock in the Offering.
To the extent that the Underwriters exercise their option, each Underwriter will
be committed, subject to certain conditions, to purchase a number of such
additional shares proportionate to such Underwriter's initial commitment.
The Company and its directors, officers and shareholders have agreed to
deliver to the Representatives prior to the date of this Prospectus lock-up
agreements under which they agree not to sell, offer for sale, contract to sell
or otherwise dispose of any shares of Common Stock or any securities exercisable
for or convertible into its Common Stock or any rights to acquire Common Stock
for a period of 180 days after the date of this Prospectus, without the prior
written consent of Allen & Company Incorporated on behalf of the Underwriters,
except for certain stock repurchases that may be required pursuant to employment
agreements. See "Shares Eligible for Future Sale."
Prior to the Offering there has been no public market for the Common Stock.
The initial public offering price will be determined by negotiation between the
Company and the Representatives. Among the factors to be considered in
determining such public offering price are the nature of the Company's business,
its history, recent financial operating information, prospects and management
abilities, the general condition of the securities markets at the time of the
Offering and other factors deemed relevant.
The Representatives have informed the Company that they do not expect sales
to discretionary accounts by the Underwriters to exceed five percent of the
total number of shares of Common Stock being offered pursuant to the Offering.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
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<PAGE> 74
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Neal, Gerber & Eisenberg, Chicago, Illinois. Charles Evans Gerber and
Norman J. Gantz, partners in the firm, serve as a director and as Secretary,
respectively, of the Company. In addition, Mr. Gerber and Marshall E. Eisenberg,
who is also a partner in the firm, are trustees of trusts which indirectly own
shares of Common Stock. Further, Mr. Gerber holds options to purchase shares of
Common Stock, and will be entitled to be granted additional options to purchase
shares of Common Stock under the Stock Plan. Certain legal matters in connection
with this offering will be passed upon for the Underwriters by Fried, Frank,
Harris, Shriver & Jacobson (a partnership including professional corporations),
New York, New York. Fried, Frank, Harris, Shriver & Jacobson will rely on Neal,
Gerber & Eisenberg with respect to certain matters of Illinois law.
EXPERTS
The consolidated financial statements of the Company as of January 31, 1995
and 1996 and for each of the years in the three year period ended January 31,
1996, the combined financial statements of the Unconsolidated Ticketing Joint
Ventures as of January 31, 1995 and 1996 and for each of the years in the
three-year period ended January 31, 1996, the financial statements of
Ticketmaster-Indiana (A Joint Venture) as of January 31, 1995 and 1996 and for
each of the years in the two year period ended January 31, 1996 and the
consolidated financial statements of the Pacer/CATS/CCS Joint Venture as of and
for the periods ended December 31, 1994 and 1995 included in this Prospectus
have been so included in reliance on the reports of KPMG Peat Marwick LLP,
independent auditors, given on the authority of said firm as experts in auditing
and accounting. The report of KPMG Peat Marwick LLP covering the December 31,
1995, consolidated financial statements of the Pacer/CATS/CCS Joint Venture
contains an explanatory paragraph that states that the Joint Venture's recurring
losses from operations and net capital deficiency raise substantial doubt about
the Joint Venture's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
The financial statements of Ticketmaster of Delaware Valley, Inc. as of
December 31, 1995 and for the year ended December 31, 1995 included in this
Prospectus have been so included in reliance on the report of Grant Thornton
LLP, independent auditors, given on the authority of said firm as experts in
auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and to the exhibits and schedules filed therewith. A copy
of the Registration Statement may be inspected without charge at the public
reference facilities of the Commission located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
7 World Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or
any part of the Registration Statement may be obtained at the prescribed rates
from the Public Reference Section of the Commission at its principal office in
Washington, D.C. Such materials also may be accessed electronically by means of
the Commission's home page on the Internet at http://www.sec.gov.
Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
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<PAGE> 75
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TICKETMASTER GROUP, INC. AND SUBSIDIARIES
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets -- January 31, 1995 and 1996 and July 31, 1996
(Unaudited)......................................................................... F-3
Consolidated Statements of Operations -- Years ended January 31, 1994, 1995 and 1996
and six months ended July 31, 1995 and 1996 (Unaudited)............................. F-4
Consolidated Statements of Shareholders' Deficiency -- Years ended January 31, 1994,
1995 and 1996 and six months ended July 31, 1996 (Unaudited)........................ F-5
Consolidated Statements of Cash Flows -- Years ended January 31, 1994, 1995 and 1996
and six months ended July 31, 1995 and 1996 (Unaudited)............................. F-6
Notes to Consolidated Financial Statements............................................ F-7
UNCONSOLIDATED TICKETING JOINT VENTURES OF TICKETMASTER GROUP, INC.
Independent Auditors' Report.......................................................... F-22
Combined Balance Sheets -- January 31, 1995 and 1996 and July 31, 1996 (Unaudited).... F-23
Combined Statements of Operations -- Years ended January 31, 1994, 1995 and 1996 and
six months ended July 31, 1995 and 1996 (Unaudited)................................. F-24
Combined Statements of Venturers' Capital -- Years ended January 31, 1994, 1995 and
1996 and six months ended July 31, 1996 (Unaudited)................................. F-25
Combined Statements of Cash Flows -- Years ended January 31, 1994, 1995 and 1996 and
six months ended July 31, 1995 and 1996 (Unaudited)................................. F-26
Notes to Combined Financial Statements................................................ F-27
PACER/CATS/CCS JOINT VENTURE (PACER CATS CORPORATION, COMPUTERIZED AUTOMATIC TICKET
SALES SYSTEMS LIMITED AND CCS COMPUTEL COMPUTER SYSTEM GMBH)
Independent Auditors' Report.......................................................... F-33
Consolidated Balance Sheets -- December 31, 1994 and 1995 and June 30, 1996
(Unaudited)......................................................................... F-34
Consolidated Statements of Operations and Accumulated Deficit -- the Period from April
15, 1994 (Inception) to December 31, 1994, the Year ended December 31, 1995, and the
six months ended June 30, 1995 and 1996 (Unaudited)................................. F-35
Consolidated Statements of Cash Flows -- the Period from April 15, 1994 (Inception) to
December 31, 1994, the Year ended December 31, 1995, and the six months ended June
30, 1995 and 1996 (Unaudited)....................................................... F-36
Notes to Consolidated Financial Statements............................................ F-37
TICKETMASTER INDIANA (A JOINT VENTURE)
Independent Auditors' Report.......................................................... F-42
Balance Sheets -- January 31, 1995 and 1996 and July 31, 1996 (Unaudited)............. F-43
Statements of Income and Venturers' Capital -- Years ended January 31, 1995 and 1996
and six months ended July 31, 1995 and 1996 (Unaudited)............................. F-44
Statements of Cash Flows -- Years ended January 31, 1995 and 1996 and six months ended
July 31, 1995 and 1996 (Unaudited).................................................. F-45
Notes to Financial Statements......................................................... F-46
TICKETMASTER OF DELAWARE VALLEY, INC.
Independent Auditors' Report.......................................................... F-50
Balance Sheets -- December 31, 1995 and June 30, 1996 (unaudited)..................... F-51
Statements of Earnings and Retained Earnings -- Year ended December 31, 1995 and six
months ended June 30, 1995 and 1996 (unaudited)..................................... F-52
Statements of Cash Flows -- Year ended December 31, 1995 and six months ended June 30,
1995 and 1996 (unaudited)........................................................... F-53
Notes to Financial Statements......................................................... F-54
</TABLE>
F-1
<PAGE> 76
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Ticketmaster Group, Inc.:
We have audited the accompanying consolidated balance sheets of
Ticketmaster Group, Inc. and subsidiaries as of January 31, 1995 and 1996 and
the related consolidated statements of operations, shareholders' deficiency, and
cash flows for each of the years in the three year period ended January 31,
1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ticketmaster
Group, Inc. and subsidiaries as of January 31, 1995 and 1996, and the results of
their operations and their cash flows for each of the years in the three year
period ended January 31, 1996 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Los Angeles, California
March 8, 1996, except for
the first paragraph of Note 9,
which is as of June 12, 1996, and
Notes 7 and 14, which are as of
September 19, 1996
F-2
<PAGE> 77
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
ASSETS
<TABLE>
<CAPTION>
JANUARY 31,
--------------------- JULY 31,
1995 1996 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............................... $ 38,752 $ 34,004 $ 47,093
Accounts receivable, ticket sales....................... 12,029 8,644 10,785
Accounts receivable, other.............................. 2,090 3,783 8,059
Inventory............................................... 400 623 4,454
Prepaid expenses........................................ 5,884 5,491 5,969
-------- -------- --------
Total current assets............................ 59,155 52,545 76,360
Equipment and leasehold improvements, net................. 14,000 12,776 16,276
Investments in and advances to affiliates................. 6,350 9,784 8,334
Cost in excess of net assets acquired..................... 13,345 13,645 27,333
Intangible and other assets, net.......................... 12,372 11,447 13,401
Deferred income taxes, net................................ 3,370 5,200 5,470
-------- -------- --------
$108,592 $105,397 $ 147,174
======== ======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt....................... $ 40 $ 45 $ 205
Accounts payable, trade................................. 3,569 5,352 8,401
Accounts payable, clients............................... 37,194 31,318 36,024
Accrued expenses........................................ 10,123 6,691 13,500
Deferred income......................................... 2,075 5,165 8,847
-------- -------- --------
Total current liabilities....................... 53,001 48,571 66,977
Long-term debt, net of current portion.................... 151,559 159,864 178,401
Deferred rent and other................................... 2,337 3,627 5,963
Minority interests........................................ 1,393 1,128 1,101
Exchangeable Promissory Note.............................. -- -- 5,000
Shareholders' deficiency:
Preferred stock......................................... -- -- --
Common stock, no par value, authorized 80,000,000
shares, issued and outstanding 15,310,405 shares..... -- -- --
Additional paid-in capital.............................. -- -- --
Accumulated deficit, net of foreign currency translation
adjustment........................................... (99,698) (107,793) (110,268)
-------- -------- --------
Total shareholders' deficiency.................. (99,698) (107,793) (110,268)
-------- -------- --------
$108,592 $105,397 $ 147,174
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 78
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY
YEAR ENDED JANUARY 31, 31,
----------------------------------- -----------------------
1994 1995 1996 1995 1996
--------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Ticketing operations.............. $ 140,341 $ 175,140 $ 150,879 $ 79,756 $ 89,275
Publications...................... 4,575 4,640 4,198 1,766 4,512
Sponsorship & Promotion........... 1,724 1,849 3,972 955 4,777
Merchandising..................... -- 1,321 2,201 1,255 1,395
--------- ---------- ---------- ---------- ----------
146,640 182,950 161,250 83,732 99,959
--------- ---------- ---------- ---------- ----------
Operating costs, expenses and other
items:
Ticketing operations.............. 88,089 112,695 97,147 51,383 58,655
Ticketing selling, general and
administrative................. 28,931 28,917 27,748 13,731 16,278
Publications...................... 2,297 2,908 9,129 3,368 9,115
Merchandising..................... -- 1,222 1,891 1,066 1,226
Corporate general and
administrative................. 11,738 13,722 14,758 6,874 8,396
Write off of in process research
and development................ -- 7,500 -- -- --
--------- ---------- ---------- ---------- ----------
131,055 166,964 150,673 76,422 93,670
--------- ---------- ---------- ---------- ----------
Income before other operating
items, interest and taxes.... 15,585 15,986 10,577 7,310 6,289
Depreciation and amortization..... 9,399 13,301 9,325 4,763 4,929
Equity in net income of
unconsolidated affiliates...... (1,577) (1,360) (1,458) (1,345) (2,136)
--------- ---------- ---------- ---------- ----------
Operating income............... 7,763 4,045 2,710 3,892 3,496
Other expenses:
Interest expense, net............. 3,211 12,409 12,782 6,528 5,917
Minority interests................ 712 984 273 281 126
--------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes........................ 3,840 (9,348) (10,345) (2,917) (2,547)
Income tax provision (benefit)...... 3,800 (2,670) (2,250) (590) (129)
--------- ---------- ---------- ---------- ----------
Net income (loss).............. $ 40 $ (6,678) $ (8,095) $ (2,327) $ (2,418)
========= ========== ========== ========== ==========
Net income (loss) per share......... $ 0.01 $ (0.44) $ (0.53) $ (0.15) $ (0.16)
========= ========== ========== ========== ==========
Weighted average number of common
shares outstanding................ 4,992,563 15,310,405 15,310,405 15,310,405 15,310,405
========= ========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 79
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
PREFERRED STOCK, NO PAR COMMON STOCK, NO PAR RETAINED
(NUMBER OF SHARES) (NUMBER OF SHARES) ADDITIONAL EARNINGS/ TOTAL
----------------------- --------------------- PAID IN (ACCUMULATED SHAREHOLDERS'
SERIES I SERIES II SERIES A SERIES B CAPITAL DEFICIT) DEFICIENCY
---------- ---------- ---------- -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 31,
1993..................... 9,452,982 5,700,085 2,973,385 47,701 $ 13,479 $ 8,605 $ 22,084
Issuance of Series A common
stock.................... -- -- 12,539,222 -- 177,348 (3,214) 174,134
Redemption of preferred
stock.................... (9,452,982) (5,700,085) -- -- (10,593) -- (10,593)
Repurchase of Series A
common stock............. -- -- (249,903) -- (25,943) -- (25,943)
Dividends paid to preferred
shareholders............. (12,848) (12,848)
Dividends paid to common
shareholders............. -- -- -- -- (154,291) (85,603) (239,894)
Net income................. -- -- -- -- 40 40
---------- ---------- ---------- -------- ---------- ---------- ---------
Balance at January 31,
1994..................... -- -- 15,262,704 47,701 -- (93,020) (93,020)
Common stock conversion.... 47,701 (47,701) --
Net loss................... -- -- -- (6,678) (6,678)
---------- ---------- ---------- -------- ---------- ---------- ---------
Balance at January 31,
1995..................... -- -- 15,310,405 -- -- (99,698) (99,698)
Net loss................... -- -- -- -- (8,095) (8,095)
---------- ---------- ---------- -------- ---------- ---------- ---------
Balance at January 31,
1996..................... -- -- 15,310,405 -- -- (107,793) (107,793)
Foreign currency
translation adjustment
(unaudited).............. -- -- -- -- -- (57) (57)
Net loss (unaudited)....... -- -- -- -- -- (2,418) (2,418)
---------- ---------- ---------- -------- ---------- ---------- ---------
Balance at July 31, 1996
(unaudited).............. -- -- 15,310,405 -- $ -- $ (110,268) $(110,268)
========== ========== ========== ======== ========== ========== =========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 80
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JANUARY 31, JULY 31,
--------------------------------- -----------------
1994 1995 1996 1995 1996
--------- --------- --------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................. $ 40 $ (6,678) $ (8,095) $(2,327) $(2,418)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization............................... 9,399 13,301 9,325 4,763 4,929
Income attributable to minority interests................... 712 984 273 281 126
Equity in net income of unconsolidated affiliates........... (1,577) (1,360) (1,458) (1,345) (2,136)
Deferred income taxes....................................... (60) (4,200) (1,830) (300) (270)
Changes in operating assets and liabilities, net of effects
from purchase of venturers' interests:
Accounts receivable, ticket sales........................ (4,241) 1,797 3,385 (2,018) (680)
Accounts receivable, other............................... (192) (624) (1,693) 272 484
Inventory................................................ (655) 520 (223) 7 63
Prepaid expenses......................................... 1,530 (1,036) 393 1,524 457
Accounts payable, trade.................................. 532 (501) 1,783 (1,012) (782)
Accounts payable, clients................................ 7,394 7,632 (5,876) 982 2,013
Accrued expenses......................................... 42 4,036 (3,432) (4,464) 1,337
Deferred income.......................................... 1,192 (1,409) 3,090 (275) 1,998
Deferred rent and other.................................. 455 (153) 1,290 1,134 2,336
--------- --------- --------- ------- -------
Net cash provided by (used in) operating activities.... 14,571 12,309 (3,068) (2,778) 7,457
--------- --------- --------- ------- -------
Cash flows from investing activities:
Purchase of equipment and leasehold improvements.............. (3,072) (6,838) (3,644) (2,012) (3,260)
Investments in affiliates..................................... (1,280) (2,586) (7,736) (1,853) (1,809)
Return on investments in affiliates........................... 3,845 4,060 5,760 5,254 2,940
Cost in excess of net assets acquired......................... (6,402) (3,250) (2,225) (2,225) (1,550)
Intangible and other assets................................... 659 (5,939) (1,607) (3,604) 193
Payment for acquisitions of venturers' interests, net of cash
acquired.................................................... -- -- -- -- (1,172)
--------- --------- --------- ------- -------
Net cash used in investing activities.................. (6,250) (14,553) (9,452) (4,440) (4,658)
--------- --------- --------- ------- -------
Cash flows from financing activities:
Proceeds from long-term debt.................................. 138,890 161,036 136,339 4,230 10,773
Reduction of long-term debt................................... (21,497) (144,910) (128,029) -- (273)
Distributions to minority shareholders........................ (650) (1,040) (538) (383) (153)
Issuance of common stock...................................... 169,803 -- -- -- --
Redemption and retirement of preferred and common stock....... (36,536) -- -- -- --
Payment of dividends/distributions............................ (252,742) -- -- -- --
--------- --------- --------- ------- -------
Net cash (used in) provided by financing activities.... (2,732) 15,086 7,772 3,847 10,347
--------- --------- --------- ------- -------
Effect of exchange rate changes on cash and cash equivalents.... -- -- -- -- (57)
--------- --------- --------- ------- -------
Net increase (decrease) in cash and cash-equivalents... 5,589 12,842 (4,748) (3,371) 13,089
Cash and cash equivalents, beginning of period.................. 20,321 25,910 38,752 38,752 34,004
--------- --------- --------- ------- -------
Cash and cash equivalents, end of period........................ $ 25,910 $ 38,752 $ 34,004 $35,381 $47,093
========= ========= ========= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.................................................... $ 2,155 $ 14,268 $ 12,913 $ 6,705 $ 6,108
Income taxes................................................ 4,743 4,256 997 714 564
========= ========= ========= ======= =======
</TABLE>
Supplemental schedule of noncash investing and financing activities:
During the six months ended July 31, 1996, the Company acquired the 50%
interest of its partners in the European Joint Venture and Pacer/CATS/CCS. In
conjunction with the acquisitions, liabilities were assumed as follows:
<TABLE>
<S> <C>
Fair value of assets acquired................................ $29,300
Cash paid for venturers' interests........................... 6,000
Exchangeable promissory note issued for venturer's
interests.................................................. 5,000
-------
Liabilities assumed................................. $18,300
=======
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 81
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Ticketmaster Group, Inc. and subsidiaries (the Company) is the leading
provider of automated ticketing services in the United States with clients
including the country's foremost entertainment facilities, promoters and
professional sports franchises. The Company has established its market position
by providing automated ticketing services to organizations that sponsor events,
which enable patrons alternatives to purchasing tickets through operator-staffed
call centers and independent sales outlets remote to the facility box office.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries and majority (80% or greater) owned companies and
joint ventures. Investments in companies and joint ventures, which ownership
interests range from 20-50% and in which the Company exercises significant
influence over operating and financial policies, are accounted for using the
equity method at cost plus advances, increased or decreased by the Company's
share of earnings or losses, less dividends received. All significant
intercompany balances and transactions have been eliminated.
Unaudited Interim Financial Statements
The accompanying consolidated financial statements of the Company as of
July 31, 1996 and for the six months ended July 31, 1995 and 1996 are unaudited,
but in the opinion of management reflect all adjustments necessary for a fair
presentation of such consolidated financial statements in accordance with
generally accepted accounting principles. The results of operations for interim
periods are not necessarily indicative of results for a full year.
Revenue Recognition
Revenue from ticket operations is recognized as tickets are sold. Revenue
from all other sources is recognized either upon delivery or when the service is
provided.
Cash and Cash Equivalents
The Company classifies all highly liquid debt instruments purchased with an
original maturity of three months or less as cash equivalents.
Accounts Receivable, Ticket Sales
Accounts receivable, ticket sales are principally due from ticketing
outlets and represent the face value of the tickets sold plus convenience
charges, generally net of outlet commissions. The Company performs credit
evaluations of new ticket outlets, which are reviewed and updated periodically,
requiring collateral as circumstances warrant.
Inventory
Inventory, consisting primarily of systems hardware and supplies, is stated
at the lower of cost (specific identification) or market.
F-7
<PAGE> 82
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets of three to five years or, for leasehold
improvements, the term of the lease, if shorter. When assets are retired or
otherwise disposed of, the cost is removed from the asset account and the
corresponding accumulated depreciation is removed from the related allowance
account and any gain or loss is reflected in results of operations.
Cost in Excess of Net Assets Acquired
The cost in excess of net assets acquired represents amounts allocated to
goodwill through the purchase of other businesses, ticketing operations and
minority interests and is being amortized by the straight-line method
principally over terms ranging from ten to fifteen years.
The Company continually monitors its cost in excess of net assets acquired
(goodwill) to determine whether any impairment of these assets has occurred. In
making such determination with respect to goodwill, the Company evaluates the
expected future cash flows, on an undiscounted basis, of the underlying
businesses which gave rise to such amounts. Based on this review, the Company
does not believe that any impairment of its goodwill has occurred.
Accounts Payable, Clients
Accounts payable, clients represents contractual amounts due to clients for
tickets sold by the Company on behalf of the organizations that sponsor events.
Deferred Revenue
Deferred revenue primarily consists of subscription revenue collected in
advance of the subscription period. Deferred revenue is recognized as earned,
pro rata on a monthly basis, over the life of subscriptions. Costs in connection
with the procurement of subscriptions are charged to expense as incurred.
Income Taxes
Deferred tax assets and liabilities are recognized with respect to the tax
consequences attributable to the differences between the financial statement
carrying values and tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which these temporary differences are expected to be
recovered or settled. Further, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the
enactment date.
Foreign Currency Translation
The consolidated financial statements of foreign subsidiaries are
translated into U.S. dollars. Gains and losses resulting from translation are
accumulated in a separate component of shareholders' equity until the investment
in the foreign entity is sold or liquidated. Gains and losses on currency
transactions were immaterial for all periods presented.
F-8
<PAGE> 83
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
The Company places its temporary cash investments principally in commercial
paper with large domestic and international companies and limits the amount of
credit exposure in any one company.
Income (Loss) per Share
Income (loss) per share is based on the weighted average number of Common
Shares outstanding, as adjusted for the reverse stock split (Note 15) for all
periods presented.
Pursuant to the requirements of the Securities and Exchange Commission,
Common Shares and stock options issued by the Company during the twelve months
immediately preceding an initial public offering have been included in the
calculation of the weighted average shares outstanding as if they were
outstanding for all periods presented using the treasury stock method.
Financial Instruments
The estimated fair values of cash, accounts receivable, notes receivable,
accounts payable, accrued expenses, income taxes payable and long term debt
approximate their carrying value because of the short term maturity of these
instruments or the stated interest rates are indicative of market interest
rates.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123, "Accounting for Stock-Based Compensation". SFAS No. 123 encourages
a new method of recognizing stock-based compensation expense using the estimated
fair value of employee stock options. Alternatively, companies may choose to
retain the approach set forth in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and provide expanded footnote
disclosure. The statement is effective for the Company's fiscal year 1997. The
Company currently does not plan to use the fair value method when it adopts the
pronouncement.
F-9
<PAGE> 84
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(2) EQUIPMENT & LEASEHOLD IMPROVEMENTS, NET
Equipment and leasehold improvements consisted of the following (in
thousands):
<TABLE>
<CAPTION>
JANUARY 31,
--------------------- JULY 31,
1995 1996 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment........................ $ 16,004 $ 17,203 $ 21,440
Telephone equipment and furnishings....... 7,733 7,688 9,540
Transportation equipment.................. 562 642 803
Leasehold improvements.................... 3,485 3,516 3,690
-------- -------- --------
27,784 29,049 35,473
Less accumulated depreciation &
amortization............................ (13,784) (16,273) (19,197)
-------- -------- --------
$ 14,000 $ 12,776 $ 16,276
======== ======== ========
</TABLE>
(3) INTANGIBLE AND OTHER ASSETS, NET
Intangible and other long term assets consisted of the following (in
thousands):
<TABLE>
<CAPTION>
JANUARY 31,
------------------- JULY 31,
1995 1996 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Purchased user agreements................... $ 7,448 $ 5,949 $ 8,031
Covenants not to compete.................... 1,638 1,274 1,137
Other....................................... 3,286 2,674 3,053
Notes Receivable............................ -- 1,550 1,180
------- ------- -------
$12,372 $11,447 $13,401
======= ======= =======
</TABLE>
The purchased user agreements and other long term assets are being
amortized generally in accordance with the contract terms, primarily on a
straight-line basis, including any annual minimum guarantees specified by the
contract. The lives of the contracts generally range from 2 to 10 years. The
covenants not to compete are being amortized using the straight-line method over
the lives of the noncompetition agreements, principally ranging from 2 to 10
years. Other long term assets include prepaid bank fees.
Notes receivable consists of the long term portion of a $2 million note
entered into with a related party in May 1995. The $2 million note bears an
interest rate of prime (8.25% at July 31, 1996) plus 1% and is due in monthly
installments through April 30, 1997 with the balance due on May 31, 1997.
F-10
<PAGE> 85
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(4) INVESTMENTS IN AND ADVANCES TO AFFILIATES
Investments in Joint Ventures, which the Company refers to also as
affiliates or " affiliated companies", consisted of the following (in
thousands):
<TABLE>
<CAPTION>
JANUARY 31,
------------------ JULY 31,
1995 1996 1996
------ ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Investments in Ticketing Joint Ventures.............. $5,345 $ 7,458 $ 5,673
Investment in Pacer/CATS/CCS......................... (334) (2,430) --
Advances to Pacer/CATS/CCS........................... 500 2,000 --
Investment in and advances to VJNIL (defined
below)............................................. -- 2,270 2,181
Other investments.................................... 839 486 480
------ ------- ------
$6,350 $ 9,784 $ 8,334
====== ======= ======
</TABLE>
All of the above investments are accounted for under the equity method. The
Company is managing general partner of each of the Joint Ventures.
TICKETING JOINT VENTURES
The percentage interest owned for the ticketing joint ventures is as
follows:
<TABLE>
<CAPTION>
JANUARY 31,
----------------- JULY 31,
VENTURE 1995 1996 1996
----------------------------------------------------- ------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Ticketmaster-Northwest............................... 50.00% 50.00% 50.00%
Ticketmaster-Indiana................................. 50.00% 50.00% 50.00%
Ticketmaster-Southeast............................... 33.33% 33.33% 33.33%
Ticketmaster-Australia............................... 0.00% 50.00% 50.00%
TM-UK Limited........................................ 50.00% 50.00% 100.00%
TM-Europe Group...................................... 50.00% 50.00% 100.00%
</TABLE>
On December 1, 1995, the Company entered into a series of agreements which
resulted in the acquisition of a 50% interest in Joint Ventures with its former
licensee in Melbourne, Australia for Australian $2.8 million (approximately US
$2 million). Subsequent to January 31, 1996, an additional Australian $400,000
(approximately US $300,000) was paid in accordance with certain contingent
consideration provisions of the Joint Venture Agreement for a total of
Australian $3.2 million (approximately US $2.3 million).
F-11
<PAGE> 86
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(4) INVESTMENTS IN AND ADVANCES TO AFFILIATES (CONTINUED)
Summarized financial information of the unconsolidated ticketing joint
ventures is presented below (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JANUARY 31, JULY 31,
------------------------------- -------------------
1994 1995 1996 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
COMBINED RESULTS OF OPERATIONS
Revenues......................... $41,812 $49,915 $57,068 $29,054 $33,271
Income before other operating
items, interest and taxes...... 8,671 11,352 15,852 8,158 8,741
Net income....................... 3,738 6,903 12,450 6,469 6,537
</TABLE>
<TABLE>
<CAPTION>
JANUARY 31,
------------------- JULY 31,
1995 1996 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
COMBINED FINANCIAL POSITION
Total assets........................................ $30,376 $41,373 $29,309
Total liabilities................................... 19,273 25,938 17,316
Venturers' capital.................................. 11,103 15,435 11,993
</TABLE>
PACER/CATS/CCS
On April 14, 1994, the Company and WIL Incorporated (WIL), formed a joint
venture, Pacer/CATS/CCS -- a Wembley/Ticketmaster Joint Venture (the Pacer Joint
Venture) to develop, design and service stand-alone computer ticket systems, as
well as other management information systems to be used in various venues,
including motion picture theaters, stadiums, arenas and amusement parks. During
the years ended January 31, 1995 and 1996, the Company had a 50% interest in and
served as the managing general partner of the Pacer Joint Venture. On July 29,
1996 (as described in Note 15), the Company became the 100% owner of the Pacer
Joint Venture.
F-12
<PAGE> 87
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(4) INVESTMENTS IN AND ADVANCES TO AFFILIATES (CONTINUED)
Summarized financial information of the Pacer Joint Venture is presented
below (in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15
(INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, -------------------
1994 1995 1995 1996
------------ ------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
Revenues...................... $ 19,354 $ 22,985 $10,755 $12,964
Loss before other operating
items, interest and taxes... (1,578) (2,761) (1,240) (185)
Net loss...................... (3,271) (5,007) (2,272) (1,173)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEETS
Current assets.............................. $10,147 $ 9,883 $ 9,212
Noncurrent assets........................... 5,490 5,671 5,752
------- ------- -------
Total assets...................... $15,637 $15,554 $14,964
======= ======= =======
Current liabilities......................... $ 8,770 $ 8,549 $ 7,504
Noncurrent liabilities...................... 6,964 7,322 7,507
Due to Joint Venture partners............... -- 2,000 2,000
Venturer's deficiency....................... (97) (2,317) (2,047)
------- ------- -------
Total liabilities and deficit..... $15,637 $15,554 $14,964
======= ======= =======
</TABLE>
During the Company's fiscal year ended January 31, 1996 and the six months
ended July 31, 1996, the Company was the principal source of funds to the
venture for operating purposes; accordingly, the Company recorded losses in
excess of its proportionate 50% interest of approximately $1.7 million and
$550,000 for the year ended January 31, 1996 and the six months ended July 31,
1996, respectively.
VIDEO JUKEBOX NETWORK INTERNATIONAL LIMITED (VJNIL)
On June 30, 1995, the Company acquired 50% of the common stock in VJNIL for
$2.2 million in cash and commitments for future management services equivalent
to $1 million (the VJNIL Transaction). The investment is being accounted for
using the equity method of accounting. The purchase price exceeded the equity in
the net assets of VJNIL by $2.2 million, which is being amortized on the
straight line method over a period of ten years. Summarized financial
information relating to VJNIL has not been presented since its operating results
and financial position are not material to the Company.
Concurrent with the closing of the VJNIL Transaction, the Company loaned
VJNIL $1.5 million. The Note Receivable bears an interest rate of Prime (8.25%
at July 31, 1996) plus 1%; the first payment is due on July 1, 1997 with the
final installment due on October 1, 2005.
F-13
<PAGE> 88
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(5) LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
JANUARY 31,
------------------- JULY 31,
1995 1996 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable to bank on revolving loan (commitments
of $135 million at January 31, 1995, $100 million at
January 31, 1996, and July 31, 1996, respectively),
collateralized by substantially all of the Company's
assets, payable on December 31, 1999: bearing
interest at the London Inter-Bank Offering Rate
(4.3%, 5.5% and 5.4% at January 31, 1995 and 1996,
and July 31, 1996, respectively) plus the applicable
margin, as defined (1.825%, 1.625% and 1.625% at
January 31, 1995 and 1996, and July 31, 1996,
respectively)....................................... $111,450 $ 84,800 $ 95,800
Notes payable to bank on term loan collateralized by
substantially all of the Company's assets and
certain publicly traded common stock pledged by the
major shareholder, payable on December 31, 1999:
bearing interest at the London Inter-Bank Offering
Rate (4.3%, 5.5% and 5.4% at January 31, 1995 and
1996, and July 31, 1996, respectively), plus the
applicable margin, as defined (1.825% , 1.625% and
1.625% at January 31, 1995 and 1996, and July 31,
1996, respectively)................................. 40,000 75,000 75,000
Notes payable to bank on term loan collateralized by
substantially all of Pacer's assets, interest at
prime (8.25% at July 31, 1996) plus 0.25% or at the
Inter-Bank Offering Rate (8.25% at July 31, 1996),
plus 225 basis points; interest payable monthly;
principal payable monthly beginning July 31, 1997
with the balance due on June 30, 1999............... -- -- 7,507
Other................................................. 149 109 299
-------- -------- --------
151,599 159,909 178,606
Less current portion.................................. 40 45 205
-------- -------- --------
$151,559 $159,864 $ 178,401
======== ======== =========
</TABLE>
Annual principal payments due subsequent to January 31, 1996 are as follows
(in thousands):
<TABLE>
<S> <C>
Year ending January 31:
1997.................................................... $ 45
1998.................................................... 50
1999.................................................... 9,814
2000.................................................... 150,000
--------
$159,909
========
</TABLE>
Aggregate bank group commitment under the terms of the Company's revolving
loan agreement, currently equals $100 million reducing to $90 million at
December 31, 1997 and $75 million at December 31, 1998.
F-14
<PAGE> 89
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(5) LONG-TERM DEBT (CONTINUED)
The Company's revolving credit and term loan borrowing agreements with its
bank group are subject to certain restrictive covenants relating to, among other
things, net worth, cash flows and capital expenditures. The Company was in
compliance with its restrictive covenants or has obtained the necessary waivers
from its bank for the fiscal years ended January 31, 1994, 1995 and 1996 and for
the six months ended July 31, 1996. In addition, the Company's Credit agreements
impose restrictions on the payment of dividends to the Company's shareholders.
The Company has issued standby letters of credit totaling $125,000 and $1.4
million on January 31, 1996 and July 31, 1996, respectively.
(6) INCOME TAXES
Deferred income taxes result from temporary differences in the tax and
financial reporting bases of certain assets and liabilities. The sources of
these differences and the tax effect of each were as follows (in thousands):
<TABLE>
<CAPTION>
JANUARY 31,
----------------- JULY 31,
1995 1996 1996
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
DEFERRED TAX ASSETS:
Investments in affiliates due to equity in net loss
and amortization period differences............... $3,370 $5,125 $ 5,025
Deferred revenue.................................... -- 975 1,050
Contributions....................................... -- 375 615
State and local taxes............................... 165 130 125
Cost in excess of net assets acquired, principally
due to amortization............................... 90 -- --
Other............................................... 5 50 35
------ ------ ------
Total deferred tax assets................. 3,630 6,655 6,850
DEFERRED TAX LIABILITIES:
Other intangible assets, principally due to
amortization...................................... -- 880 700
Equipment and leasehold improvements, principally
due to depreciation............................... 260 575 415
Cost in excess of net assets acquired, principally
due to amortization............................... -- -- 265
------ ------ ------
Total deferred tax liabilities............ 260 1,455 1,380
------ ------ ------
Net deferred tax assets.............. $3,370 $5,200 $ 5,470
====== ====== =======
</TABLE>
In assessing the realizability of the net deferred tax assets, management
considers whether it is more likely than not that some or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax assets
depends upon the generation of future taxable income during the periods in which
those temporary differences become deductible. As of January 31, 1996 and July
31, 1996, the Company had not provided a valuation allowance to reduce the net
deferred tax assets due to the Company's expectation of future taxable income
against which the deferred tax asset may be realized.
F-15
<PAGE> 90
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(6) INCOME TAXES (CONTINUED)
The provision/(benefit) for income taxes consisted of the following (in
thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED JANUARY 31, JULY 31,
------------------------------ ---------------
1994 1995 1996 1995 1996
------ ------- ------- ----- -----
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Current:
Federal............................ $3,000 $ 510 $(1,500) $(720) $(390)
State.............................. 860 1,020 1,080 430 490
Foreign............................ -- -- -- -- 41
Deferred........................... (60) (4,200) (1,830) (300) (270)
------ ------- ------- ----- -----
$3,800 $(2,670) $(2,250) $(590) $(129)
====== ======= ======= ===== =====
</TABLE>
The following is a reconciliation of the statutory Federal income tax rate
to the Company's effective income tax rate:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED JANUARY 31, JULY 31,
----------------------- -------------
1994 1995 1996 1995 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Statutory Federal income tax expense........ 35% (34)% (34)% (34)% (34)%
State income taxes, net of Federal
benefit................................... 6 2 5 8 13
Effect of foreign operations................ 3 (1) (3) (4) (7)
Stock transaction and other costs........... 48 -- -- -- --
Amortization of excess cost over fair market
value of net assets acquired.............. 7 3 5 4 10
Meals and entertainment limitation.......... 3 2 4 5
Other....................................... -- (2) 3 2 8
--- --- --- --- ---
99% (29)% (22)% (20)% (5)%
=== === === === ===
</TABLE>
(7) CAPITAL STOCK
In August 1996, the Company amended its Restated Certificate of
Incorporation pursuant to which the classes of the Company's Common and
Preferred Stock were revised (the Stock Amendment). There were no accounting
effects as a result of the Stock Amendment; a description of the Company's
structure before and after the Stock Amendment follows:
COMMON STOCK
Prior to the Stock Amendment, the Company had authorized the issuance of
80,000,000 shares of Series A Common Stock and 1,000,000 shares of Series B
Common Stock. Each share of Series A Common Stock was entitled to one vote;
Series B Common Stock had no voting rights. As of January 31, 1995 and 1996, and
July 31, 1996, 15,310,405 shares of Series A Common Stock were issued and
outstanding, and no shares of Series B Common Stock were issued or outstanding.
Subsequent to the Stock Amendment, the authorized, issued and outstanding
shares of the Company's Series A Common Stock, and the voting rights, remained
unchanged. The Company no longer had Series B Common Stock.
F-16
<PAGE> 91
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(7) CAPITAL STOCK (CONTINUED)
PREFERRED STOCK
Prior to the Stock Amendment, the Company had authorized three series of
Preferred Stock. The Company had 15,000,000 authorized shares of no par Series I
Preferred Stock, 5,900,000 authorized shares of no par Series II Preferred
Stock, and 4,100,000 shares of no par undesignated Preferred Stock. As of
January 31, 1995 and 1996, and July 31, 1996 no shares of Preferred Stock were
issued or outstanding.
Subsequent to the Stock Amendment, the Company had 20,000,000 authorized
shares of no par undesignated Preferred Stock. The Company no longer had Series
I or II Preferred Stock.
(8) STOCK TRANSACTIONS
COMMON STOCK
On November 17, 1993, the Company declared and made a dividend distribution
of $130 million to the holders of its common stock as of the close of business
on November 19, 1993, which was paid as of that date in the form of promissory
notes issued by the Company.
On November 19 and December 10, 1993, the Company declared additional
dividend distributions of $100 million and $9.9 million, payable to the holders
of its common stock as of the close of business on November 22, 1993 and
December 14, 1993, respectively.
Also on November 19, 1993, the Company repurchased 249,903 shares of its no
par Series A common stock for $26 million, in exchange for promissory notes
(Repurchase Notes) issued by the Company.
In December 1993, the Company authorized an additional 55,000,000 shares of
no par Series A common stock, bringing the total number of such authorized
shares to 80,000,000. On December 15, 1993, the Company issued 12,233,014 of
these additional shares for proceeds of $170 million, net of $3.2 million of
issue costs. The proceeds from the stock sale were utilized to repay in full the
promissory notes issued to the shareholders on November 17, 1993, to partially
fund the dividends declared on November 19 and December 10, 1993 and to repay in
part the Repurchase Notes. The balance of the dividend distribution and the
Repurchase Notes not funded in cash were funded with promissory notes (the
Promissory Notes) issued by the Company in the aggregate principal amount of
$100 million due December 1, 1994. Terms of the Promissory Notes include
interest at the annual rate of 10% and restrictions on the payment of dividends.
On November 18, 1994, the Promissory Notes plus accrued interest were paid from
proceeds received in connection with the extension of credit from a group of
banks.
Additionally, as part of the December 15, 1993 transactions, the Company
acquired the remaining shares of certain subsidiaries held by minority
shareholders (including an officer of the Company) for approximately $6.3
million in cash and 306,208 shares of the Company's Series A no par common stock
which was valued at approximately $4.3 million. Accordingly, the purchase price
allocable to cost in excess of the net assets acquired was approximately $10.6
million, which is principally being amortized over a period of 10 years, and had
a remaining unamortized balance of $9.7 million, $8.8 million and $8.4 million
as of January 31, 1995 and 1996, and July 31, 1996, respectively.
For the year ended January 31, 1994, the Company incurred approximately
$6.8 million in expenses, including financial advisory and legal fees and
special employee bonuses, related to the transactions described above, which are
reflected in the consolidated statement of operations.
F-17
<PAGE> 92
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(8) STOCK TRANSACTIONS (CONTINUED)
PREFERRED STOCK
On November 1, 1993, the Company repurchased all 9,452,982 issued and
outstanding shares of the Company's Series I preferred stock, at the stated
redemption price of $1.00 per share and paid cumulative dividends in arrears of
$11.5 million.
On November 1, 1993, the Company paid a dividend of $1.3 millon on the
5,700,875 outstanding shares of its Series II preferred stock, and on December
15, 1993, the Company repurchased all 5,700,875 outstanding shares of its Series
II preferred stock at the stated redemption price of $.20 per share, and paid
dividends totaling $6.8 million which had accumulated since the November 1, 1993
dividend payment date.
(9) LITIGATION AND GOVERNMENT INVESTIGATION
The Company and several of its subsidiaries were named as defendants in
several Federal and state antitrust consumer class action lawsuits. These cases
alleged, among other things, violations of Sections 1 and 2 of the Sherman Act
and various state causes of action under state antitrust laws. On May 31, 1996,
these cases were dismissed on the merits without leave to amend. On June 12,
1996, plaintiffs appealed the court's decision.
On March 17, 1995, Moviefone, Inc. and the Teleticketing Company, L.P.
filed a complaint against a subsidiary of the Company in the United States
District Court for the Southern District of New York. The complaint asserts that
the subsidiary, by its conduct, including its acquisition of a 50% interest in a
certain unconsolidated joint venture, has frustrated and prevented plaintiff's
ability to provide movie information and teleticketing services. Furthermore,
the complaint asserts that the Company's acquisition of its interest in such
joint venture violates Section 7 of the Clayton Act and the Company's business
conduct violates Sections 1 and 2 of the Sherman Act. The Company has filed a
motion to dismiss which is fully briefed and undecided.
The Company also is involved in various other investigations, lawsuits and
claims arising in the normal conduct of its business. The Company has also at
times responded to inquiries from various government and state authorities. In
the opinion of the Company's management, none of these proceedings will have a
material effect on the Company's financial position or results of operations.
(10) COMMITMENTS AND CONTINGENCIES
The Company leases office space and equipment under various operating
leases that expire at various dates through 2003. Future minimum lease payments
are as follows as of January 31, 1996 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
JANUARY 31 AMOUNT
------------ ------
<S> <C>
1997..................................................... $ 4,994
1998..................................................... 4,886
1999..................................................... 4,329
2000..................................................... 3,717
2001..................................................... 2,926
Thereafter................................................. 6,236
-------
$27,088
=======
</TABLE>
Additional rental payments may be required for the Company's pro rata share
of certain operating expenses associated with office space leases.
F-18
<PAGE> 93
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(10) COMMITMENTS AND CONTINGENCIES (CONTINUED)
Rental expense charged to operations for operating leases was approximately
$4.8 million, $4.9 million, and $4.9 million for the years ended January 31,
1994, 1995 and 1996 respectively, and $2.4 million and $2.5 million for the six
months ended July 31, 1995 and 1996, respectively.
In September 1995, the Company agreed to advance up to $8 million (on a
non-revolving basis) to an unrelated entity. As of January 31, 1996, the Company
had advanced $1.1 million to the entity and as of July 31, 1996, all amounts
advanced and substantially all interest had been repaid.
The Company has entered into a make well agreement expiring June 30, 1997
(or sooner subject to its terms) covering $500,000 of Pacer's interest payments
on bank indebtedness.
(11) 401(K) PLAN
The Company has a 401(k) plan covering all eligible employees, which
contains an employer matching feature of 25% up to a maximum of 6% of the
employee's compensation. The Company's contribution for the plan years ended
December 31, 1993, 1994 and 1995 was approximately $200,000, $190,000 and
$310,000, respectively.
(12) RELATED PARTY TRANSACTIONS
The Company has employment contracts with certain senior executives which
require through 1999, periodic payments aggregating $3.2 million to $3.9 million
per year, plus performance bonuses based in part upon the annual results of
operations.
At January 31, 1995 and 1996, and July 31, 1996, an affiliate of a primary
lender to the Company held 196,370 shares of Series A common stock, which
represents approximately 1% of the shares outstanding.
The Company has reached an agreement expiring on December 31, 2003, with an
affiliate of its majority shareholder, whereby in exchange for services rendered
in connection with the development of the Company's web site, the Company will
pay royalties ranging from 5 - 10% of ticket service charges and merchandise
sold through its web site (net of defined deductions). The agreement calls for
an annual minimum royalty payment of $100,000 per year (pro-rated for 1996).
(13) STOCK OPTIONS
In February 1994, the Company adopted the Ticketmaster Stock Plan (the
Plan), under which 3,250,000 shares of common stock have been reserved for
issuance upon exercise of incentive stock options, nonqualified stock options,
restricted stock, stock appreciation rights or phantom stock awards. As of
January 31, 1995, the Company had granted, under the Plan, stock options to
acquire 265,111 shares of common stock at an exercise price of $14.14 per share.
No options were exercisable as of January 31, 1995. As of January 31, and July
31, 1996, 165,022 and 206,229 shares, respectively, were exercisable; the
remaining shares vest ratably over the subsequent 21 months.
On December 15, 1994, the Company granted, outside of the Plan, options to
acquire 1,331,340 shares of common stock at an exercise price of $14.14 per
share. As of January 31, 1995 and 1996, and July 31, 1996, 360,571, 693,406 and
859,824 options were exercisable, respectively. The remaining shares vest
equally through January 1, 1998.
F-19
<PAGE> 94
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(13) STOCK OPTIONS (CONTINUED)
The stock options granted to date have been issued to employees and expire
in calendar years 2003 and 2004, or earlier, in certain cases, if the individual
is no longer employed by the Company. No options were exercised as of January 31
or July 31, 1996.
(14) SUBSEQUENT EVENTS
BUSINESSES ACQUIRED
On February 12, 1996 the Company completed the acquisition of certain
assets of Tennessee Performing Arts Center Management Corporation, which manages
a ticket selling business within the state of Tennessee for a purchase price of
$1.6 million (the Nashville acquisition). The purchase price was funded from the
Company's existing credit facility.
On June 7, 1996, the Company acquired the minority interests held by its
joint venture partner in Ticketmaster UK Limited and Ticketmaster Europe Group
(collectively referred to as the European Joint Venture). The purchase
consideration was $6 million in cash and an Exchangeable Promissory Note (the
"Note") in the principal amount of $5 million, bearing interest at the prime
rate (8.25% at July 31, 1996) due on June 7, 1997. The exchange provisions of
the Note provide that it may be redeemed, only in its entirety, into shares of
Common Stock equal to the outstanding principal amount of the Note divided by
the price to be used in an initial offering of Common Stock to the public, prior
to the maturity date of the Note.
This acquisition has been recorded as a purchase transaction; accordingly,
the purchase price was allocated to the net assets acquired based on their
estimated fair market values. The excess of the estimated fair value of net
assets acquired amounted to approximately $8.9 million, which has been accounted
for as goodwill and is being amortized over 15 years using the straight line
method. The accompanying consolidated statements of operations include the
results of the European Joint Venture since the effective date of the
acquisition.
As discussed in Note 4, on July 29, 1996, the Company acquired the
remaining 50% equity interest in the Pacer Joint Venture from WIL. Consideration
paid by the Company in connection with its initial 50% interest in the Pacer
Joint Venture and the subsequent 50% interest purchased from WIL aggregated
approximately $16 million in cash and the assumption of $7.5 million of debt.
WIL's contribution to the Pacer Joint Venture included certain ticketing
technology in development and employment contracts with covenants-not-to-
compete, for which the Company paid $7.5 million and $3.75 million,
respectively. The technology in development was expensed as research and
development cost by the Company. During the year ended January 31, 1995, the
covenants-not-to-compete were charged to expense, as it was determined that this
intangible had no future value to the Company. The remaining $3.25 million of
the Company's excess investment over the underlying equity in the Pacer Joint
Venture has been recorded as cost in excess of net assets acquired and is being
amortized using the straight line method over a period of seven and a half
years.
On August 31, 1996, the Company purchased certain assets of its
Albuquerque, New Mexico licensee for $150,000.
The following unaudited pro forma information presents a summary of
consolidated results of the Company, the European Joint Venture and the Pacer
Joint Venture for the year ended January 31, 1996 and the six months ended July
31, 1996, assuming the acquisitions had been made as of February 1, 1995, with
pro forma adjustments to give affect to amortization of goodwill and interest
expense in notes payable issued in the
F-20
<PAGE> 95
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(14) SUBSEQUENT EVENTS (CONTINUED)
European Joint Venture. The pro forma financial information is not necessarily
indicative of the results of operations as they would have been had the
transactions been effective on February 1, 1995.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) JANUARY 31, 1996 JULY 31, 1996
--------------------------------------------- ----------------- ----------------
<S> <C> <C>
Total Revenue................................ $ 196,319 $118,482
Net loss..................................... (12,910) (3,483)
Loss per share............................... (0.84) (0.23)
</TABLE>
Pro forma results of operations have not been presented for the Nashville
or the New Mexico acquisitions because the pro forma effect of these
acquisitions are not significant.
BUSINESSES TO BE ACQUIRED
On August 7, 1996, the Company entered into a letter of intent to acquire
the license rights and related assets of its Philadelphia, Pennsylvania licensee
for $19 million in cash. Such consideration will be paid from the proceeds of a
loan to be obtained by the Company prior to consummation of the acquisition.
On September 12, 1996, the Company entered into a letter of intent to
acquire the 50% equity interest of its partner (the "Partner") in
Ticketmaster-Indiana. In connection with this transaction Ticketmaster-Indiana
will purchase newly issued convertible preferred stock of the Company (the
"Preferred Stock") in exchange for Ticketmaster-Indiana's promissory note in the
principal amount of $27 million and distribute the preferred stock to the
Partner. The conversion features of this Preferred stock provide that in the
event of an initial offering of the Company's Common Stock to the general public
(the Offering), the Partner shall receive shares of Common Stock having an
aggregate value of $27 million based on the price per share used in the
Offering. Absent any Offering, the Partner may cause the Company to repurchase
the Preferred Stock prior to the second anniversary of its issuance for $27
million plus interest at 10% after issuance of the Preferred Stock up to its
repurchase by the Company.
On September 19, 1996, the Company entered into an agreement to acquire a
27% equity interest in the Company's Mexican licensee from a third party for
$1.8 million in cash and 5% of net distributions (as defined) received from the
Mexican operation through December 31, 1998. Previously, on June 20, 1996, the
Company and the majority owner of its Mexican licensee (CIE) signed a letter of
intent to form a Joint Venture to operate in Central and South America wherein
the Company will license its trademark and technology to the Joint Venture in
exchange for a 23% portion September 17, 1996 of CIE's 73% ownership interest in
the Company's Mexican licensee. Upon completion of these two transactions, the
Company and CIE will each have a 50% equity interest in existing and future
ticketing service entities in Mexico, Central America and South America.
STOCK SPLIT
On August 21, 1996, the Board of Directors authorized a one-for-three
reverse stock split of the Company's common stock which subsequently was
approved by the shareholders. All references in the consolidated financial
statements to the number of common shares and per share amounts have been
retroactively restated to reflect the decreased number of common shares
outstanding.
F-21
<PAGE> 96
INDEPENDENT AUDITORS' REPORT
The Venturers:
We have audited the accompanying combined balance sheets of Unconsolidated
Ticketing Joint Ventures of Ticketmaster Group, Inc. as of January 31, 1995 and
1996 and the related combined statements of operations, venturers' capital, and
cash flows for each of the years in the three year period ended January 31,
1996. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Unconsolidated
Ticketing Joint Ventures of Ticketmaster Group, Inc. as of January 31, 1995 and
1996, and the results of their operations and their cash flows for each of the
years in the three year period ended January 31, 1996 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Los Angeles, California
March 8, 1996
F-22
<PAGE> 97
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
COMBINED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
JANUARY 31,
------------------- JULY 31,
1995 1996 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................. $12,374 $19,175 $14,060
Accounts receivable, ticket sales......................... 3,519 4,082 2,838
Accounts receivable, other................................ 408 821 649
Prepaid expenses.......................................... 928 1,631 775
------- ------- -------
Total current assets.............................. 17,229 25,709 18,322
Equipment and leasehold improvements, net................... 4,336 4,062 3,418
Due from venturers.......................................... 70 681 917
Cost in excess of net assets acquired....................... 706 566 --
Intangible and other assets, net............................ 8,035 10,355 6,652
------- ------- -------
$30,376 $41,373 $29,309
======= ======= =======
LIABILITIES AND VENTURERS' CAPITAL
Current liabilities:
Current portion of long-term debt......................... $ 222 $ 181 $ 20
Accounts payable, trade................................... 827 1,332 831
Accounts payable, clients................................. 12,408 18,744 13,020
Accrued expenses.......................................... 3,321 3,813 2,895
Deferred income........................................... 1,083 274 --
------- ------- -------
Total current liabilities......................... 17,861 24,344 16,766
Long-term debt, net of current portion...................... 295 214 91
Deferred rent and other..................................... 1,117 1,380 459
Venturers' capital.......................................... 11,103 15,435 11,993
------- ------- -------
$30,376 $41,373 $29,309
======= ======= =======
</TABLE>
See notes to combined financial statements.
F-23
<PAGE> 98
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JANUARY 31, JULY 31,
----------------------------- ------------------
1994 1995 1996 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenue:
Ticketing operations....................... $39,457 $46,921 $54,178 $27,530 $32,708
Publications............................... 1,599 2,129 1,939 1,009 176
Sponsorship & Promotion.................... 756 865 951 515 387
------- ------- ------- ------- -------
41,812 49,915 57,068 29,054 33,271
------- ------- ------- ------- -------
Operating costs, expenses and other items:
Ticketing operations....................... 22,846 28,208 30,836 15,652 18,344
Ticketing selling, general and
administrative.......................... 9,187 9,094 9,232 4,633 6,058
Publications............................... 1,108 1,261 1,148 611 128
------- ------- ------- ------- -------
33,141 38,563 41,216 20,896 24,530
------- ------- ------- ------- -------
Income before other operating items,
interest and taxes.................... 8,671 11,352 15,852 8,158 8,741
Depreciation and amortization.............. 4,826 4,373 3,445 1,711 2,083
------- ------- ------- ------- -------
Operating income........................ 3,845 6,979 12,407 6,447 6,658
Interest expense (income), net............... 107 76 (43) (22) (128)
------- ------- ------- ------- -------
Income before income taxes.............. 3,738 6,903 12,450 6,469 6,786
Foreign income tax provision................. -- -- -- -- 249
------- ------- ------- ------- -------
Net income.............................. $ 3,738 $ 6,903 $12,450 $ 6,469 $ 6,537
======= ======= ======= ======= =======
</TABLE>
See notes to combined financial statements.
F-24
<PAGE> 99
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
COMBINED STATEMENTS OF VENTURERS' CAPITAL
(IN THOUSANDS)
<TABLE>
<CAPTION>
TICKETMASTER JOINT VENTURE VENTURERS'
GROUP, INC. PARTNERS' CAPITAL
------------ ------------- ----------
<S> <C> <C> <C>
Balance at January 31, 1993............................. $ 6,779 $ 7,374 $ 14,153
Distribution to Venturers............................... (3,845) (4,790) (8,635)
Venturers' investment................................... 1,745 1,745 3,490
Foreign currency translation adjustment................. 7 7 14
Net income.............................................. 1,576 2,162 3,738
------- ------- --------
Balance at January 31, 1994............................. 6,262 6,498 12,760
Distribution to Venturers............................... (4,060) (4,870) (8,930)
Venturers' investment................................... -- 434 434
Foreign currency translation adjustment................. (32) (32) (64)
Net income.............................................. 3,118 3,785 6,903
------- ------- --------
Balance at January 31, 1995............................. 5,288 5,815 11,103
Distribution to Venturers............................... (5,760) (6,595) (12,355)
Venturers' investment................................... 2,088 2,088 4,176
Foreign currency translation adjustment................. 31 30 61
Net income.............................................. 5,763 6,687 12,450
------- ------- --------
Balance at January 31, 1996............................. 7,410 8,025 15,435
Distribution to Venturers (unaudited)................... (2,940) (3,280) (6,220)
Venturers' investment (unaudited)....................... 306 306 612
Purchase and sale of Venturer's interest (unaudited).... (2,127) (2,127) (4,254)
Foreign currency translation adjustment (unaudited)..... (59) (58) (117)
Net income (unaudited).................................. 3,062 3,475 6,537
------- ------- --------
Balance at July 31, 1996 (unaudited).................... $ 5,652 $ 6,341 $ 11,993
======= ======= ========
</TABLE>
See notes to combined financial statements.
F-25
<PAGE> 100
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY
YEAR ENDED JANUARY 31, 31,
---------------------------- ---------------------
1994 1995 1996 1995 1996
------- ------- -------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................ $ 3,738 $ 6,903 $ 12,450 $ 6,469 $ 6,537
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......... 4,826 4,373 3,445 1,711 2,083
Changes in operating assets and
liabilities:
Accounts receivable, ticket sales.... (1,139) 969 (563) (883) (217)
Accounts receivable, other........... (76) 71 (413) (149) 12
Prepaid expenses..................... 125 (457) (703) (257) 111
Accounts payable, trade.............. (299) 206 505 631 161
Accounts payable, clients............ (2,093) 4,145 6,336 438 (3,031)
Accrued expenses..................... 1,323 (54) 492 1,643 2,259
Deferred income...................... 477 (36) (809) (22) (274)
Due from venturers................... 273 (734) (611) (2,019) (236)
Deferred rent and other.............. (716) 1,117 263 (3) (921)
------- ------- ------- ------- -------
Net cash provided by operating
activities...................... 6,439 16,503 20,392 7,559 6,484
------- ------- ------- ------- -------
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements........................... (1,139) (1,522) (1,644) (614) (1,303)
Intangible and other assets............... (3,515) 155 (3,707) 40 (724)
Purchase of venturer's interest........... -- -- -- -- (4,254)
------- ------- ------- ------- -------
Net cash used in investing
activities...................... (4,654) (1,367) (5,351) (574) (6,281)
------- ------- ------- ------- -------
Cash flows from financing activities:
Investments by venturers.................. 3,490 434 4,176 -- 612
Distributions to venturers................ (8,635) (8,930) (12,355) (7,005) (6,220)
Proceeds from long-term debt.............. 313 161 231 183 412
Reduction of long-term debt............... (574) (692) (353) (92) (5)
------- ------- ------- ------- -------
Net cash used in financing
activities...................... (5,406) (9,027) (8,301) (6,914) (5,201)
------- ------- ------- ------- -------
Effect of exchange rate changes on cash and
cash equivalents.......................... 14 (64) 61 (5) (117)
------- ------- ------- ------- -------
Net increase (decrease) in cash
and cash-equivalents............ (3,607) 6,045 6,801 66 (5,115)
Cash and cash equivalents, beginning of
period.................................... 9,936 6,329 12,374 12,374 19,175
------- ------- ------- ------- -------
Cash and cash equivalents, end of period.... $ 6,329 $12,374 $ 19,175 $12,440 $14,060
======= ======= ======= ======= =======
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest............................... $ 170 $ 213 $ 171 $ 101 $ 31
======= ======= ======= ======= =======
</TABLE>
See notes to combined financial statements.
F-26
<PAGE> 101
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Ticketmaster Group, Inc. (TM Group) owns interests in unconsolidated Joint
Ventures which in turn provide automated ticketing services to organizations
within selected geographic regions that sponsor events. These services provide
patrons with alternatives to purchasing tickets at box offices, including the
ability to purchase tickets at outlets, call centers or via the internet. A
subsidiary of TM Group acts as managing general partner for each unconsolidated
Joint Venture included in these combined financial statements. TM Groups'
interest in each is as follows:
<TABLE>
<CAPTION>
JANUARY 31,
----------------- JULY 31,
VENTURE 1995 1996 1996
--------------------------------------------- ------ ------ ----------
(UNAUDITED)
<S> <C> <C> <C>
Ticketmaster-Northwest....................... 50.00% 50.00% 50.00%
Ticketmaster-Indiana......................... 50.00% 50.00% 50.00%
TM-UK Limited................................ 50.00% 50.00% 100.00%
TM-Europe Group.............................. 50.00% 50.00% 100.00%
Ticketmaster-Southeast....................... 33.33% 33.33% 33.33%
Ticketmaster Australasia..................... 0.00% 50.00% 50.00%
</TABLE>
The combined financial statements include the accounts of the
unconsolidated Joint Ventures listed above, collectively referred to as the
"Company" or "Joint Ventures". All material intercompany balances and
transactions have been eliminated.
Unaudited Interim Financial Statements
The accompanying combined financial statements of the Joint Ventures as of
July 31, 1996 and for the six months ended July 31, 1995 and 1996 are unaudited,
but in the opinion of management reflect all adjustments necessary for a fair
presentation of such combined financial statements in accordance with generally
accepted accounting principles. The results of operations for interim periods
are not necessarily indicative of results for a full year.
Revenue Recognition
Revenue from ticket operations is recognized as tickets are sold.
Cash and Cash Equivalents
The Company classifies all highly liquid debt instruments purchased with an
original maturity of three months or less as cash equivalents.
Accounts Receivable, Ticket Sales
Accounts receivable, ticket sales are principally from ticketing outlets
and represent the face value of the tickets sold plus convenience charges,
generally net of outlet commissions. The Company performs credit evaluations of
new ticket outlets, which are reviewed and updated periodically, requiring
collateral as circumstances warrant.
F-27
<PAGE> 102
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets of three to five years or, for leasehold
improvements, the term of the lease, if shorter. When assets are retired or
otherwise disposed of, the cost is removed from the asset account and the
corresponding accumulated depreciation is removed from the related allowance
account and any gain or loss is reflected in results of operations.
Cost in Excess of Net Assets Acquired
The cost in excess of net assets acquired represents amounts allocated to
goodwill through the purchase of ticketing operations and minority interests and
is being amortized by the straight-line method primarily over terms of up to ten
years.
The Company continually monitors its cost in excess of net assets acquired
(goodwill) to determine whether any impairment of these assets has occurred. In
making such determination with respect to goodwill, the Company evaluates the
expected future cash flows, on an undiscounted basis, of the underlying
businesses which gave rise to such amounts. Based on this review, the Company
does not believe that any impairment of its goodwill has occurred.
Accounts Payable, Clients
Accounts payable, clients represents contractual amounts due to clients for
tickets sold by the Company on behalf of the organizations that sponsor events.
Deferred Revenue
Deferred revenue primarily consists of subscription revenue collected in
advance of the subscription period. Deferred revenue is recorded as earned, pro
rata on a monthly basis, over the life of subscriptions. Costs in connection
with the procurement of subscriptions are charged to expense as incurred.
Income Taxes
Income tax expense represents taxes in foreign jurisdictions. No provision
has been made for Federal and state income taxes, since these taxes are the
responsibility of the Venturers.
Foreign Currency Translation
The combined financial statements of foreign subsidiaries are translated
into U.S. dollars. Gains and losses resulting from translation are accumulated
in a separate component of Venturers' capital until the investment in the
foreign entity is sold or liquidated. The Company's transactions predominately
occur in U.S. dollars. Gains and losses on currency transactions were immaterial
for all periods presented.
Concentration of Credit Risk
The Company places its temporary cash investments principally in commercial
paper with large domestic and international companies and limits the amount of
credit exposure in any one company.
F-28
<PAGE> 103
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments
The estimated fair values of cash, accounts receivable, due from Joint
Venturers, accounts payable, accrued expenses and long term debt approximate
their carrying value because of the short term maturity of these instruments or
the stated interest rates are indicative of market interest rates.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(2) EQUIPMENT & LEASEHOLD IMPROVEMENTS, NET
Equipment and leasehold improvements consisted of the following (in
thousands):
<TABLE>
<CAPTION>
JANUARY 31,
------------------ JULY 31,
1995 1996 1996
------ ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment........................... $6,920 $ 7,455 $ 6,811
Telephone equipment and furnishings.......... 2,344 1,984 449
Transportation equipment..................... 321 489 299
Leasehold improvements....................... 258 282 400
------ ------- ------
9,843 10,210 7,959
Less accumulated depreciation &
amortization............................... 5,507 6,148 4,541
------ ------- ------
$4,336 $ 4,062 $ 3,418
====== ======= ======
</TABLE>
(3) INTANGIBLE AND OTHER ASSETS, NET
Intangible and other long term assets consisted of the following (in
thousands):
<TABLE>
<CAPTION>
JANUARY 31,
------------------ JULY 31,
1995 1996 1996
------ ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Purchased user agreements.................... $7,835 $10,218 $ 6,560
Other........................................ 200 137 92
------ ------- ------
$8,035 $10,355 $ 6,652
====== ======= ======
</TABLE>
The purchased user agreements and other long term assets are being
amortized generally in accordance with the contract terms, primarily on a
straight-line basis, including any annual minimum guarantees specified by the
contract. The lives of the contracts generally range from 2 to 10 years.
F-29
<PAGE> 104
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(4) LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
JANUARY 31,
------------- JULY 31,
1995 1996 1996
---- ---- -----------
(UNAUDITED)
<S> <C> <C> <C>
Obligations payable on a revolving line of
credit, collateralized by a Joint Venture's
assets, interest at the foreign bank's base
rate (6.25% at January 31, 1995), plus 1.25%
payable in equal amounts....................... $ 80 $ -- $ --
Obligations payable for assets acquired, imputed
interest at 9.4%, payable in monthly
installments................................... 437 280 --
Obligations payable for assets acquired, imputed
interest at 8.7%, payable in monthly
installments through November 30, 1998......... -- 115 111
---- ---- ----
517 395 111
Less current portion............................. 222 181 20
---- ---- ----
$295 $214 $ 91
==== ==== ====
</TABLE>
Annual principal payments due subsequent to January 31, 1996 are as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDING JANUARY 31:
------------------------------------------------------
<S> <C>
1997............................................. $181
1998............................................. 130
1999............................................. 84
----
$395
====
</TABLE>
F-30
<PAGE> 105
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(5) OPERATING INFORMATION BY GEOGRAPHIC REGION
The Joint Ventures' operations are summarized by geographic region as
follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, JULY 31,
--------------------------- -----------------
1994 1995 1996 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue
United States.................. $33,039 $40,448 $43,251 $23,332 $23,194
Europe......................... 8,773 9,467 12,031 5,722 5,534
Other.......................... -- -- 1,786 -- 4,543
------- ------- ------- ------- -------
$41,812 $49,915 $57,068 $29,054 $33,271
======= ======= ======= ======= =======
Net income (loss)
United States.................. $ 5,609 $ 8,180 $11,064 $ 6,112 $ 5,620
Europe......................... (1,871) (1,277) 1,184 357 604
Other.......................... -- -- 202 -- 313
------- ------- ------- ------- -------
$ 3,738 $ 6,903 $12,450 $ 6,469 $ 6,537
======= ======= ======= ======= =======
Identifiable assets
United States.................. $17,521 $22,154 $23,112 $22,324 $19,503
Europe......................... 9,666 8,222 8,420 10,288 --
Other.......................... -- -- 9,841 -- 9,806
------- ------- ------- ------- -------
$27,187 $30,376 $41,373 $32,612 $29,309
======= ======= ======= ======= =======
</TABLE>
(6) COMMITMENTS AND CONTINGENCIES
The Joint Venturers' lease office space and equipment under various
operating leases that expire at various dates through 2007. Future minimum lease
payments are as follows as of January 31, 1996 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING
JANUARY 31 AMOUNT
------------ ------
<S> <C>
1997.............................................. $1,719
1998.............................................. 1,688
1999.............................................. 1,671
2000.............................................. 1,602
2001.............................................. 1,059
Thereafter........................................ 1,913
------
$9,652
======
</TABLE>
Additional rental payments may be required for the Joint Venturers' pro
rata share of certain operating expenses associated with office space leases.
Rental expense charged to operations for operating leases was approximately
$1.7 million, $1.8 million, and $2.0 million for the years ended January 31,
1994, 1995 and 1996, respectively, and $950,000 and $1.1 million for the six
months ended July 31, 1995 and 1996, respectively.
F-31
<PAGE> 106
UNCONSOLIDATED TICKETING JOINT VENTURES
OF TICKETMASTER GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(7) 401(K) PLAN
Certain Joint Ventures have 401(k) plans covering all eligible employees,
which contain an employer matching feature of 25% up to a maximum of 6% of the
employee's compensation. The Joint Ventures' contribution for the plan years
ended December 31, 1993, 1994 and 1995 was approximately $43,000, $34,000 and
$32,000, respectively.
(8) RELATED PARTY TRANSACTIONS
Amounts charged to the Joint Ventures by TM Group or its affiliates under
various agreements were as follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED JANUARY 31, JULY 31,
------------------------ -------------
1994 1995 1996 1995 1996
---- ---- ------ ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Management Fees..................... $305 $325 $ 435 $165 $390
Reimbursements for other services... 845 945 1,050 505 640
</TABLE>
Purchases of equipment by the Venturers was approximately $500,000,
$685,000, and $475,000 for the years ended January 31, 1994, 1995 and 1996,
respectively.
(9) SUBSEQUENT EVENT
On June 7, 1996, the TM Group acquired the 50% equity interest of its
partner in the European Joint Venture (and in a related entity) for $6 million
in cash and an Exchangeable Promissory Note in the principal amount of $5
million due June 7, 1997.
F-32
<PAGE> 107
INDEPENDENT AUDITORS' REPORT
The Venturers
Pacer/CATS/CCS -- a Wembley Ticketmaster Joint Venture:
We have audited the accompanying consolidated balance sheets of
Pacer/CATS/CCS -- a Wembley Ticketmaster Joint Venture as of December 31, 1994
and 1995 and the related consolidated statements of operations and accumulated
deficit and cash flows for the period from April 15, 1994 (inception) to
December 31, 1994 and for the year ended December 31, 1995. These consolidated
financial statements are the responsibility of the Joint Venture's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Pacer/CATS/CCS -- a Wembley Ticketmaster Joint Venture as of December 31, 1994
and 1995, and the results of their operations and their cash flows for the
period from April 15, 1994 (inception) to December 31, 1994 and for the year
ended December 31, 1995 in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared
assuming that the Joint Venture will continue as a going concern. As discussed
in Note 2 to the consolidated financial statements, the Joint Venture has
suffered recurring losses from operations and has a net capital deficiency that
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
KPMG Peat Marwick LLP
Denver, Colorado
February 22, 1996,
except for note 4 which
is as of July 31, 1996
F-33
<PAGE> 108
PACER/CATS/CCS -- A WEMBLEY
TICKETMASTER JOINT VENTURE
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash...................................................... $ 893 $ 603 $ 529
Trade accounts receivable, net of allowances of $1,479,
$1,266 and $1,211 at December 31, 1994 and 1995, and
June 30, 1996 (unaudited), respectively................ 5,618 5,208 4,600
Inventory................................................. 3,469 3,545 3,894
Prepaid expenses and other................................ 167 527 189
------- ------- -------
Total current assets.............................. 10,147 9,883 9,212
Equipment and leasehold improvements, net................. 1,356 1,841 2,049
Cost in excess of net assets acquired, net of accumulated
amortization of $200, $484 and $626 at December 31,
1994 and 1995, and June 30, 1996 (unaudited),
respectively........................................... 4,050 3,766 3,624
Other assets.............................................. 84 64 79
------- ------- -------
$15,637 $15,554 $14,964
======= ======= =======
LIABILITIES AND VENTURERS' DEFICIT
Current liabilities:
Current portion of long-term debt......................... $ 2,186 $ 643 $ --
Trade accounts payable.................................... 2,052 2,850 3,170
Accrued liabilities....................................... 2,413 2,667 2,350
Capital lease obligations................................. 399 300 300
Deferred revenue.......................................... 1,720 2,089 1,684
------- ------- -------
Total current liabilities......................... 8,770 8,549 7,504
Long-term debt to bank, less current portion................ 6,964 7,322 7,507
Subordinated note payable to venturer....................... -- 2,000 2,000
------- ------- -------
Total liabilities................................. 15,734 17,871 17,011
------- ------- -------
Venturers' deficit:
Capital contributions..................................... 3,000 5,575 7,375
Accumulated deficit....................................... (3,271) (8,278) (9,451)
Cumulative foreign currency translation adjustment........ 174 386 29
------- ------- -------
Total venturers' deficit.......................... (97) (2,317) (2,047)
------- ------- -------
Commitments and contingencies............................... $15,637 $15,554 $14,964
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-34
<PAGE> 109
PACER/CATS/CCS - A WEMBLEY
TICKETMASTER JOINT VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15, SIX MONTHS ENDED
(INCEPTION) YEAR ENDED JUNE 30,
TO DECEMBER 31, DECEMBER 31, -------------------
1994 1995 1995 1996
--------------- ------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue:
Installation.............................. $12,141 $ 13,233 $ 5,723 $ 8,252
Service................................... 4,932 7,697 3,950 3,759
Product sales............................. 2,281 2,055 1,082 953
------- ------- ------- -------
Total revenue..................... 19,354 22,985 10,755 12,964
------- ------- ------- -------
Costs of revenue, expenses and other items:
Installation.............................. 7,730 9,739 4,169 5,429
Service................................... 3,111 4,989 2,458 2,498
Products.................................. 1,321 1,184 619 535
------- ------- ------- -------
Total costs of revenue............ 12,162 15,912 7,246 8,462
------- ------- ------- -------
General and administrative................ 5,654 4,998 2,362 2,053
Sales and marketing....................... 1,507 1,904 936 963
Research and development.................. 1,609 2,932 1,451 1,671
------- ------- ------- -------
Loss before other operating items,
interest and taxes.............. (1,578) (2,761) (1,240) (185)
Depreciation and amortization............. 689 956 508 504
------- ------- ------- -------
Loss from operations.............. (2,267) (3,717) (1,748) (689)
Interest expense, net....................... 504 985 458 484
------- ------- ------- -------
Loss before income taxes.......... (2,771) (4,702) (2,206) (1,173)
Income taxes - withholdings on foreign
sales..................................... 500 305 66 --
------- ------- ------- -------
Net loss.......................... (3,271) (5,007) (2,272) (1,173)
Accumulated deficit, beginning of period.... -- (3,271) (3,271) (8,278)
------- ------- ------- -------
Accumulated deficit, end of period.......... $(3,271) $ (8,278) $(5,543) $(9,451)
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
F-35
<PAGE> 110
PACER/CATS/CCS -- A WEMBLEY
TICKETMASTER JOINT VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15, SIX MONTHS ENDED
(INCEPTION) YEAR ENDED JUNE 30,
TO DECEMBER 31, DECEMBER 31, -------------------
1994 1995 1995 1996
--------------- ------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................. $(3,271) $ (5,007) $(2,272) $(1,173)
Adjustments to reconcile net loss to net
cash used in (provided by) operating
activities:
Provisions for bad debts and inventory
obsolescence......................... 1,660 111 111 --
Depreciation and amortization.......... 689 956 508 504
Changes in operating assets and
liabilities:
Trade accounts receivable, net....... 267 407 714 802
Inventory............................ 167 (8) (261) (434)
Prepaid expenses and other assets.... 17 (337) (546) 419
Trade accounts payable............... 67 827 (101) 249
Accrued liabilities.................. 294 (52) (144) 172
Deferred revenue..................... (632) 369 130 (302)
------- ------- ------- -------
Net cash used in (provided by)
operating activities............ (742) (2,734) (1,861) 237
------- ------- ------- -------
Cash flows from investing
activities -- purchase of equipment and
leasehold improvements, net............... (405) (1,157) (507) (570)
------- ------- ------- -------
Cash flows from financing activities:
Proceeds from long-term debt.............. -- 100 100 --
Principal payments on long-term debt...... (350) (1,286) (750) (542)
Principal payments on capital lease
obligations............................ (256) (99) (153) --
Proceeds from note payable to venturer.... 500 2,000 2,000 --
Capital contribution...................... -- 2,575 300 1,800
------- ------- ------- -------
Net cash (used in) provided by
financing activities............ (106) 3,290 1,497 1,258
------- ------- ------- -------
Effect of exchange rate changes on cash..... 60 311 637 (999)
------- ------- ------- -------
Decrease in cash.................. (1,193) (290) (234) (74)
Cash, beginning of period................... 2,086 893 893 603
------- ------- ------- -------
Cash, end of period......................... $ 893 $ 603 $ 659 $ 529
======= ======= ======= =======
Supplemental disclosure of cash flow
information:
Cash paid for interest.................... $ 451 $ 757 $ 470 $ 295
Cash paid for income taxes................ 487 127 -- 151
</TABLE>
See accompanying notes to consolidated financial statements.
F-36
<PAGE> 111
PACER/CATS/CCS -- A WEMBLEY
TICKETMASTER JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) ORGANIZATION
On April 15, 1994, Ticketmaster Cinema Group Ltd. (TCG), a wholly owned
subsidiary of Ticketmaster Corporation (Ticketmaster), completed the formation
of Pacer/CATS/CCS -- A Wembley Ticketmaster Joint Venture (the Venture) with
WIL, Inc. (WIL), a wholly owned subsidiary of Wembley plc (Wembley). TCG, which
is the managing partner, and WIL each own a 50% undivided interest in the
Venture. The Venture acquired certain assets and assumed certain liabilities of
three companies previously owned by Wembley: Pacer Cats Corporation (Pacer
Cats), Computerized Automatic Ticket Sales Systems Limited (CATS) and stock of
CCS Computel Computer System GmbH (CCS). The formation of the Venture was
accounted for based upon the historical cost of the assets acquired and the
liabilities assumed by the Venture from the Wembley entities. TCG acquired a 50%
ownership interest in the Venture in exchange for a direct payment to Wembley of
$16 million. TCG did not make a capital contribution to the Venture at
inception. During 1995, CCS/CATS Pte, Ltd. (CATS -- Singapore) was formed as a
wholly owned subsidiary of the Venture.
The Venture engages in the design, sale and servicing of hardware and
software for the operation of computerized ticketing and concession systems for
motion picture theaters, stadiums, arenas, zoos and theme parks. The Venture is
based in Denver, Colorado, with offices in Los Angeles, Germany, Great Britain,
France, Singapore, and Australia.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Venture
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared
assuming the Venture will continue as a going concern. As shown in the
accompanying consolidated financial statements, the Venture incurred net losses
of $3.3 million and $5 million for the period from April 15, 1994 (inception) to
December 31, 1994 and the year ended December 31, 1995, respectively, and has a
net capital deficiency as of December 31, 1995. These factors raise substantial
doubt about the Venture's ability to continue as a going concern. Management's
plans to continue as a going concern include obtaining additional equity or debt
financing from the Venturers or third parties and attaining future profitable
operations. The accompanying consolidated financial statements do not include
any adjustments relating to the outcome of this uncertainty.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Unaudited Interim Financial Statements
The accompanying consolidated financial statements of the Venture as of
June 30, 1996 and for the six months ended June 30, 1995 and 1996 are unaudited,
but in the opinion of management reflect all adjustments necessary for a fair
presentation of such consolidated financial statements in accordance with
generally
F-37
<PAGE> 112
PACER/CATS/CCS -- A WEMBLEY
TICKETMASTER JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
accepted accounting principles. The results of operations for interim periods
are not necessarily indicative of results for a full year.
Inventory
Inventory, consisting of systems hardware, maintenance parts and supplies,
is primarily stated at the lower of cost (first-in, first-out) or market.
Equipment and Leasehold Improvements
Equipment, consisting primarily of computer equipment, is stated at cost.
Equipment under capital leases is recorded at the present value of the minimum
lease payments at the inception of the lease. Depreciation is calculated using
the straight-line method over estimated useful lives of the related assets,
ranging from three to five years. Leasehold improvements and equipment owned
under capitalized leases are amortized using the straight-line method over the
lesser of their estimated useful life or the lease term.
Cost in Excess of Net Assets Acquired
Cost in excess of net assets acquired, which relates to CCS, is amortized
using the straight-line method over 15 years. Management periodically evaluates
the recoverability of the asset utilizing forecasted undiscounted future
operating cash flows. The amount of impairment, if any, is measured based on
projected discounted future operating cash flows using a discount rate
reflecting the Venture's average cost of funds.
Translation of Foreign Currencies
Assets and liabilities of the Venture's foreign operations are translated
into U.S. dollars at the current rate of exchange on the balance sheet date.
Revenue and expenses are translated at the average exchange rate for the period.
Unrealized foreign currency translation adjustments do not affect the results of
operations and are reflected as a component of venturers' deficit. Gains and
losses resulting from foreign currency transactions are included in indirect
costs as incurred.
Revenue and Costs
Revenue and the related costs of installation and product sales are
recognized upon delivery to the customer. Service revenue is recognized ratably
over the contract term.
Income Taxes
Income tax expense represents taxes withheld on foreign sales. The
Venture's net loss is reported in the individual tax returns of the venturers.
F-38
<PAGE> 113
PACER/CATS/CCS -- A WEMBLEY
TICKETMASTER JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(3) EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements consist of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer and other equipment................ $ 4,069 $ 5,130 $ 5,458
Furniture and fixtures...................... 919 824 1,102
Vehicles.................................... 136 87 88
Leasehold improvements...................... 60 123 165
------- ------- -------
5,184 6,164 6,813
Less accumulated depreciation and
amortization.............................. (3,828) (4,323) (4,764)
------- ------- -------
$ 1,356 $ 1,841 $ 2,049
======= ======= =======
</TABLE>
(4) LONG-TERM DEBT
At the date of formation on April 15, 1994 the Venture entered into a
credit agreement (Original Agreement) with U.S. Bank of Washington (U.S. Bank),
whereby U.S. Bank extended to the Venture certain credit facilities. On July 31,
1996 the Original Agreement was amended and restated whereby U.S. Bank extended
a loan of $7.5 million (Amended Agreement) which was used to repay borrowings
outstanding under the Original Agreement. Borrowings under the Amended Agreement
bear interest at the prime rate plus .25% or at the Venture's option, beginning
July 1, 1998, the IBOR Rate plus 225 basis points per annum. Monthly interest
payments only are due for the period August 1, 1996 through June 30, 1997.
Principal and interest payments are due in monthly installments, beginning July
31, 1997, in an amount equal to the lesser of $107,166 or excess cash flow as
defined in the Amended Agreement. Borrowings are secured by substantially all
assets of the Venture. Standby and commercial letters of credit will be issued
by U.S. Bank in an aggregate amount not to exceed $200,000 at any one time.
These letters of credit will be available until the principal balance is equal
to or less than $6 million. Upon reducing the principal balance to less than or
equal to $6 million, U.S. Bank will provide funds to the Venture from time to
time on a revolving credit basis up to a maximum of $6 million.
Maturities under the Amended Agreement as of December 31, 1995 are as
follows (in thousands):
<TABLE>
<S> <C>
1996................................................ $ 643
1997................................................ 643
1998................................................ 1,286
1999................................................ 1,286
2000 and thereafter................................. 4,107
------
7,965
Less current portion.............................. 643
------
$7,322
======
</TABLE>
The Amended Agreement includes limitations on dividends and distributions,
transactions with affiliates, indebtedness, investments, and requires the
maintenance of certain financial ratios, and levels of working capital and
tangible net worth, including a restriction on the Venturers' ability to
distribute as dividends, cash to its parent.
F-39
<PAGE> 114
PACER/CATS/CCS -- A WEMBLEY
TICKETMASTER JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
The classification of long-term debt and current portion of long-term debt
in the accompanying consolidated balance sheet as of December 31, 1995 reflects
the terms and maturities of the Amended Agreement.
(5) SUBORDINATED NOTE PAYABLE TO VENTURER
As of December 31, 1995, the Venture had issued a note payable in the
amount of $2 million to TCG to provide working capital. The note bears interest
at the prime rate plus .25%, (8.75% at December 31, 1995) and is due on demand,
but is subordinated to the payment of the bank debt in Note 4. In addition, the
Venturer has indicated that they do not intend to request repayment in 1996.
Accordingly, the note payable to Venturer has been reclassified as long-term in
the accompanying consolidated financial statements.
(6) OPERATING INFORMATION BY GEOGRAPHIC REGION
The Venture's operations are summarized by geographic region as follows:
(in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15,
(INCEPTION) SIX MONTHS ENDED
THROUGH YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, -------------------
1994 1995 1995 1996
------------------ ------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue from unaffiliated
customers:
United States................... $ 9,188 $ 10,411 $ 5,131 $ 8,019
Europe.......................... 8,946 10,025 4,681 4,416
Other........................... 1,220 2,549 943 529
------- ------- ------- -------
$ 19,354 $ 22,985 $10,755 $12,964
======= ======= ======= =======
Net loss:
United States................... $ (3,868) $ (5,024) $(2,041) $ (797)
Europe.......................... 743 (146) (244) (191)
Other........................... (146) 163 13 (185)
------- ------- ------- -------
$ (3,271) $ (5,007) $(2,272) $(1,173)
======= ======= ======= =======
Identifiable assets (excluding
goodwill):
United States................... $ 5,915 $ 5,155 $ 5,098 $ 5,655
Europe.......................... 3,524 5,696 5,213 4,427
Other........................... 2,148 937 1,009 1,258
------- ------- ------- -------
$ 11,587 $ 11,788 $11,320 $11,340
======= ======= ======= =======
</TABLE>
(7) RELATED-PARTY TRANSACTIONS
The Joint Venture agreement provides for a management fee to be paid to
TCG. Management fees payable to TCG totaled $71,000, $100,000 and $50,000 for
the period from April 15, 1994 (inception) to December 31, 1994, for the year
ended December 31, 1995 and for the six months ended June 30, 1996,
respectively.
F-40
<PAGE> 115
PACER/CATS/CCS -- A WEMBLEY
TICKETMASTER JOINT VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(8) EMPLOYEE BENEFIT PLAN
All eligible employees of the Venture in the United States may participate
in a 401(k) Plan sponsored by Ticketmaster Corporation. The Plan includes
employer matching of 25% of the employee's contribution up to a maximum of 6% of
the employee's compensation. The Venture's contributions for the period from
April 15, 1994 (inception) through December 31, 1994 and for the year ended
December 31, 1995, totaled $10,000 and $21,000, respectively.
(9) COMMITMENTS AND CONTINGENCIES
Leases
The Joint Venture leases office space and equipment under various
noncancelable operating leases. Future minimum lease payments under such leases
(with lease terms in excess of one year) as of December 31, 1995 were as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
----------------------------------------------------
<S> <C>
1996.............................................. $ 626
1997.............................................. 550
1998.............................................. 472
1999.............................................. 385
2000 and thereafter............................... 542
------
Total minimum lease payments.............. $2,575
======
</TABLE>
Rent expense for operating leases for the period from April 15, 1994
(inception) through December 31, 1994, for the year ended December 31, 1995, and
for the six months ended June 30, 1995 and 1996, was approximately $402,000,
$624,000, $215,000, and $260,000, respectively.
Additional rental payments may be required for the Venture's pro rata share
of certain operating expenses.
Litigation
In January 1996, the Venture was named as a defendant in a civil action by
a leasing company alleging that the Venture defaulted on certain equipment
rental agreements. The Plaintiffs seek back rental payments and other damages in
excess of $900,000. The plaintiffs also assert claims against one of the
Venturers as guarantor of the Venture's obligations. The Venturer has asserted a
cross claim against the Venture seeking indemnification.
Although management of the Venture believes that this proceeding will not
will have a material effect on the financial position, results of operations or
cash flows of the Venture, no assurance can be given as to the ultimate
resolution of this matter. The accompanying consolidated financial statements do
not include any adjustments relating to the outcome of these uncertainties.
(10) SUBSEQUENT EVENTS (UNAUDITED)
On July 29, 1996, a subsidiary of Ticketmaster acquired WIL's 50% equity
interest.
F-41
<PAGE> 116
INDEPENDENT AUDITORS' REPORT
The Venturers:
Ticketmaster Indiana (A Joint Venture)
We have audited the accompanying balance sheets of the Ticketmaster Indiana
(A Joint Venture) as of January 31, 1995 and 1996 and the related statements of
income and venturers' capital, and cash flows for each of the years in the two
years ended January 31, 1996. These financial statements are the responsibility
of Ticketmaster Indiana's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ticketmaster Indiana (A
Joint Venture) as of January 31, 1995 and 1996, and the results of its
operations and its cash flows for each of the years in the two years ended
January 31, 1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Los Angeles, California
March 8, 1996
F-42
<PAGE> 117
TICKETMASTER INDIANA
(A JOINT VENTURE)
BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
JANUARY 31,
----------------- JULY 31,
1995 1996 1996
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................... $4,937 $2,240 $ 2,486
Accounts receivable, ticket sales........................... 1,761 1,081 732
Accounts receivable, trade.................................. 89 65 49
Amount due from affiliates.................................. -- 317 347
Prepaid expenses............................................ 184 258 404
------- ------- ------
Total current assets................................ 6,971 3,961 4,018
Noncurrent assets:
Equipment and leasehold improvements, net................... 2,089 1,707 1,609
Other assets................................................ 30 31 20
------- ------- ------
$9,090 $5,699 $ 5,647
======= ======= ======
LIABILITIES AND VENTURERS' CAPITAL
Current liabilities:
Accounts payable, trade..................................... $ 152 $ 241 $ 294
Accounts payable, clients................................... 4,995 2,532 2,349
Accrued expenses............................................ 825 701 1,047
Deferred income and other................................... 572 232 196
Amounts due to affiliates................................... 586 -- --
------- ------- ------
Total current liabilities........................... 7,130 3,706 3,886
Venturers' capital............................................ 1,960 1,993 1,761
------- ------- ------
$9,090 $5,699 $ 5,647
======= ======= ======
</TABLE>
See accompanying notes to financial statements.
F-43
<PAGE> 118
TICKETMASTER INDIANA
(A JOINT VENTURE)
STATEMENTS OF INCOME AND VENTURERS' CAPITAL
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
JANUARY 31, JULY 31,
------------------- -------------------
1995 1996 1995 1996
------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue............................................ $19,070 $20,759 $10,909 $11,036
Operating costs, expenses and other items:
Operating costs.................................. 9,763 9,957 5,814 6,257
Selling, general and administrative.............. 3,556 3,783 1,202 1,456
------- ------- ------- -------
13,319 13,740 7,016 7,713
------- ------- ------- -------
Income before other operating items........... 5,751 7,019 3,893 3,323
Depreciation and amortization.................... 1,065 786 395 405
------- ------- ------- -------
Net income.................................... 4,686 6,233 3,498 2,918
Venturers' capital at beginning of period.......... 1,924 1,960 1,960 1,993
Distribution to venturers.......................... (4,650) (6,200) (3,650) (3,150)
------- ------- ------- -------
Venturers' capital at end of period................ $ 1,960 $ 1,993 $ 1,808 $ 1,761
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
F-44
<PAGE> 119
TICKETMASTER INDIANA
(A JOINT VENTURE)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
JANUARY 31, JULY 31,
-------------------- --------------------
1995 1996 1995 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income..................................... $ 4,686 $ 6,233 $ 3,498 $ 2,918
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............... 1,065 786 395 405
Changes in operating assets and liabilities:
Accounts receivable....................... 421 704 739 365
Due from affiliates....................... -- (317) (284) (30)
Prepaid expenses.......................... (80) (74) (82) (146)
Other assets.............................. 303 (10) -- 11
Accounts payable, trade................... 67 89 15 53
Accounts payable, clients................. 1,793 (2,463) (1,542) (183)
Accrued expenses.......................... 445 (124) 203 346
Deferred income and rent.................. (47) (340) (30) (36)
Due to affiliates......................... 106 (586) (586) --
------- ------- ------- -------
Net cash provided by operating activities...... 8,759 3,898 2,326 3,703
Cash used in investing activities-purchases of
equipment and leasehold improvements........... (710) (395) (196) (307)
Cash flows used in financing
activities-distributions to venturers.......... (4,650) (6,200) (3,650) (3,150)
------- ------- ------- -------
Net (decrease) increase in cash and
cash equivalents..................... 3,399 (2,697) (1,520) 246
Cash and cash equivalents, beginning of period... 1,538 4,937 4,937 2,240
------- ------- ------- -------
Cash and cash equivalents, end of period......... $ 4,937 $ 2,240 $ 3,417 $ 2,486
======= ======= ======= =======
</TABLE>
F-45
<PAGE> 120
TICKETMASTER INDIANA
(A JOINT VENTURE)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF JULY 31, 1996 AND FOR THE
SIX MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Ticketmaster Indiana (Joint Venture) is a joint venture and is 50% owned by
Ticketmaster Corporation (Ticketmaster) and Evansim Entertainment, LLC,
respectively. The Joint Venture was formed on January 1, 1984 for the purpose of
providing computerized ticketing services for concert, sporting, and other
events in the states of Indiana, Ohio, Kentucky and West Virginia.
Unaudited Interim Financial Statements
The accompanying financial statements of the Joint Venture as of July 31,
1996 and for the six months ended July 31, 1995 and 1996 are unaudited, but in
the opinion of management reflect all adjustments necessary for a fair
presentation of such financial statements in accordance with generally accepted
accounting principles. The results of operations for interim periods are not
necessarily indicative of results for a full year.
Revenue Recognition
Revenue from ticket operations is recognized as tickets are sold.
Cash and Cash Equivalents
The Joint Venture classifies all highly liquid debt instruments purchased
with an original maturity of three months or less as cash equivalents.
Accounts Receivable, Ticket Sales
Accounts receivable, ticket sales are principally from ticketing outlets
and represent the face value of the tickets sold plus convenience charges,
generally net of outlet commissions. The Joint Venture performs credit
evaluations of new ticket outlets, which are reviewed and updated periodically,
requiring collateral as circumstances warrant.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Depreciation and
amortization are computed using the straight-line method over the estimated
useful lives of the related assets of three to five years or, for leasehold
improvements, the term of the lease, if shorter. When assets are retired or
otherwise disposed of, the cost is removed from the asset account and the
corresponding accumulated depreciation is removed from the related allowance
account and any gain or loss is reflected in results of operations.
Concentration of Credit Risk
The Joint Venture places its cash equivalents principally in money market
accounts with its banks. The money market investments are diverse and generally
short-term and, therefore, bear minimal risk. The Joint Venture has not
experienced any losses on its money market investments.
Accounts Payable, Clients
Accounts payable, clients represents contractual amounts due to clients for
tickets sold by the Joint Venture on behalf of the organizations that sponsor
events.
F-46
<PAGE> 121
TICKETMASTER INDIANA
(A JOINT VENTURE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE
SIX MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred Income and Other
Deferred income primarily consists of subscription revenue collected in
advance of the subscription period. Deferred income is recorded as earned, pro
rata on a monthly basis, over the life of subscriptions. Costs in connection
with the procurement of subscriptions are charged to expense as incurred.
Income Taxes
No provision has been made for Federal and state income taxes, since these
taxes are the responsibility of the joint venturers.
Financial Instruments
The estimated fair values of cash, accounts receivable, due from venturers,
accounts payable and accrued expenses approximate their carrying value because
of the short term maturity of these instruments or the stated interest rates are
indicative of market interest rates.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(2) EQUIPMENT & LEASEHOLD IMPROVEMENTS, NET
Equipment and leasehold improvements consisted of the following (in
thousands):
<TABLE>
<CAPTION>
JANUARY 31,
------------------- JULY 31,
1995 1996 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment.......................... $ 4,005 $ 4,332 $ 4,228
Telephone equipment and furnishings......... 319 330 334
Transportation equipment.................... 157 204 164
Leasehold improvements...................... 55 55 67
------- ------- -------
4,536 4,921 4,793
Less accumulated depreciation &
amortization.............................. (2,447) (3,214) (3,184)
------- ------- -------
$ 2,089 $ 1,707 $ 1,609
======= ======= =======
</TABLE>
F-47
<PAGE> 122
TICKETMASTER INDIANA
(A JOINT VENTURE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JULY 31, 1996 AND FOR THE
SIX MONTHS ENDED JULY 31, 1995 AND 1996 IS UNAUDITED)
(3) COMMITMENTS AND CONTINGENCIES
The Joint Venture leases office space and equipment under various operating
leases. Future minimum lease payments are as follows as of January 31, 1996 (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDING
JANUARY 31 AMOUNT
---------------------------------------------------- ------
<S> <C>
1997.............................................. $ 387
1998.............................................. 381
1999.............................................. 379
2000.............................................. 376
2001.............................................. 166
Thereafter.......................................... 57
------
.................................................... $1,746
======
</TABLE>
Rental expense charged to operations for operating leases was approximately
$378,000, and $388,000 for the years ended January 31, 1995 and 1996,
respectively, and $196,000 and $193,000 for the six months ended July 31, 1995
and 1996, respectively.
(4) 401(K) PLAN
The Joint Venture has a 401(k) plan covering all eligible employees, which
contains an employer matching feature of 25% up to a maximum of 6% of the
employee's contribution. The Joint Venture's contribution for the plan years
ended December 31, 1994 and 1995 was approximately $11,000 and $14,000,
respectively.
(5) RELATED PARTY TRANSACTIONS
Charges from the venturers and affiliates under various agreements were as
follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED
JANUARY 31, JULY 31,
------------- -------------
1995 1996 1995 1996
---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Management Fees............................... $110 $115 $ 60 $ 60
Reimbursements for other services............. 395 435 200 300
</TABLE>
Purchases of equipment from the venturers was approximately $440,000, and
$200,000 for the years ended January 31, 1995 and 1996, respectively.
F-48
<PAGE> 123
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Ticketmaster of Delaware Valley, Inc.
We have audited the accompanying balance sheet of Ticketmaster of Delaware
Valley, Inc. (a Pennsylvania corporation) as of December 31, 1995, and the
related statements of earnings and retained earnings, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ticketmaster of Delaware
Valley, Inc. as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
Philadelphia, Pennsylvania
February 5, 1996
F-50
<PAGE> 124
TICKETMASTER OF DELAWARE VALLEY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, JUNE 30,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents (notes A3 and A4)........................ $3,324,591 $ 3,499,336
Accounts receivable (notes A5, A8 and B)........................... 702,712 1,066,364
Prepaid expenses................................................... 95,445 147,745
---------- ----------
Total current assets....................................... 4,122,748 4,713,445
---------- ----------
Equipment and furniture -- at cost (notes A6 and C)
Computer equipment................................................. 1,019,870 1,093,317
Furniture.......................................................... 82,292 83,346
Automobiles........................................................ 42,961 42,961
Leasehold improvements -- 7,139
---------- ----------
1,145,123 1,226,763
Less accumulated depreciation.............................. 969,768 1,023,316
---------- ----------
175,355 203,447
Deposits............................................................. 30,768 18,829
---------- ----------
$4,328,871 $ 4,935,721
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable (notes A8 and B)
Trade........................................................... $ 213,624 $ 1,665,807
Venues.......................................................... 1,821,360 737,130
---------- ----------
2,034,984 2,402,937
Accrued expenses and other (notes B and D)......................... 702,073 886,633
Unearned income (note A7).......................................... 146,564 73,181
---------- ----------
Total current liabilities.................................. 2,883,621 3,362,751
---------- ----------
Commitments (note E)................................................. -- --
Stockholders' equity
Common stock -- authorized, 1,000 shares of $1 par value; issued,
400 shares; outstanding, 370 shares (note F).................... 400 400
Additional paid-in capital......................................... 449,600 449,600
Retained earnings.................................................. 1,375,480 1,503,200
---------- ----------
1,825,480 1,953,200
Less cost of common stock held in treasury (30 shares) (note
B)............................................................. (380,230) (380,230)
---------- ----------
1,445,250 1,572,970
---------- ----------
$4,328,871 $ 4,935,721
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-51
<PAGE> 125
TICKETMASTER OF DELAWARE VALLEY, INC.
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------
1995 1995 1996
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Revenue
Ticket operations (net of outlet commissions and
rebates of $1,718,996, $1,261,178, and $971,258
respectively -- 1996) (notes A8 and B)............. $ 4,374,783 $2,342,941 $2,455,336
Advertising and event guide income (note A7).......... 346,584 195,631 91,494
----------- ---------- ----------
Total revenue.................................... 4,721,367 2,538,572 2,546,830
----------- ---------- ----------
Costs and expenses
Phone room............................................ 1,323,651 725,612 787,165
Operations............................................ 562,232 271,070 284,585
Sales and marketing................................... 327,163 166,535 74,964
Outlet services....................................... 121,648 62,185 54,331
General and administrative............................ 1,084,233 502,176 514,499
Depreciation and amortization (note A6)............... 124,837 64,168 54,359
----------- ---------- ----------
3,543,764 1,791,746 1,769,903
----------- ---------- ----------
Operating income................................. 1,177,603 746,826 776,927
----------- ---------- ----------
Other income (expenses)
Interest income....................................... 130,646 66,390 62,145
Interest expense...................................... (49,978) (1,352) (1,804)
Other................................................. 2,673 -- (9,548)
----------- ---------- ----------
83,341 65,038 50,793
----------- ---------- ----------
Net Earnings (note A9)........................... 1,260,944 811,864 827,720
----------- ---------- ----------
Retained earnings at beginning of year.................. 1,214,536 1,214,536 1,375,480
Stockholder distributions............................... (1,100,000) (700,000) (700,000)
----------- ---------- ----------
Retained earnings at end of year........................ $ 1,375,480 $1,326,400 $1,503,200
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-52
<PAGE> 126
TICKETMASTER OF DELAWARE VALLEY, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------
1995 1995 1996
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings...................................... $ 1,260,944 $ 811,864 $ 827,720
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation expense........................... 124,837 61,438 53,549
Gain on sale of automobile..................... (2,673) -- --
Changes in assets and liabilities
Increase in accounts receivable.............. (245,619) (9,760) (363,652)
(Increase) decrease in prepaid expenses...... (64,251) 8,175 (52,300)
(Increase) decrease in deposits.............. (3,666) (486) 11,939
Increase in accounts payable................. 634,274 104,825 367,952
(Decrease) increase in accrued expenses
and other................................. (182,969) 30,565 184,560
Decrease in unearned income.................. (73,980) (35,599) (73,383)
----------- ---------- ----------
Net cash provided by operating
activities.............................. 1,446,897 971,022 956,385
----------- ---------- ----------
Cash flows from investing activities:
Purchases of equipment and furniture, net......... (47,026) (27,247) (81,640)
Stockholder distributions......................... (1,100,000) (700,000) (700,000)
Repayment of mortgage note receivable............. 100,000 -- --
Proceeds from sale of fixed assets................ 7,643 -- --
----------- ---------- ----------
Net cash used in investing activities..... (1,039,383) (727,247) (781,640)
----------- ---------- ----------
Net increase in cash and cash
equivalents............................. 407,514 243,775 174,745
Cash and cash equivalents at beginning of year...... 2,917,077 2,917,077 3,324,591
----------- ---------- ----------
Cash and cash equivalents at end of year............ $ 3,324,591 $3,160,852 $3,499,336
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-53
<PAGE> 127
TICKETMASTER OF DELAWARE VALLEY, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS
ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED)
NOTE A -- SUMMARY OF ACCOUNTING POLICIES
Ticketmaster of Delaware Valley, Inc. (the Company) is in the business of,
among other things, designing, building, operating and servicing computerized
systems for the purposes of producing, selling, auditing and controlling sales
of admission tickets to public events primarily in the Delaware Valley. A
summary of the Company's significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows.
1. UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying financial statements of the Company as of June 30, 1996
and for the six months ended June 30, 1995 and 1996 are unaudited, but in the
opinion of management reflect all adjustments necessary for a fair presentation
of such consolidated financial statements in accordance with generally accepted
accounting principles. The results of operations for interim periods are not
necessarily indicative of results for a full year.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
3. CASH EQUIVALENTS
Cash equivalents are short-term highly liquid investments readily converted
to known amounts of cash or have maturities of three months or less.
4. CONCENTRATION OF CREDIT RISK
The Company maintains cash balances at several financial institutions
located in the Delaware Valley. Accounts at such institutions are insured by the
Federal Deposit Insurance Corporation up to $100,000. Uninsured balances
aggregate approximately $4,016,000 at June 30, 1996 and consist of funds which
are primarily invested in short-term government obligations.
5. ACCOUNTS RECEIVABLE
The Company considers all receivables to be fully collectible; accordingly,
no allowance has been made for doubtful accounts. If any receivables become
uncollectible, they will be charged to costs and expenses when that
determination is made.
6. DEPRECIATION AND AMORTIZATION
Equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the related assets.
7. UNEARNED INCOME
Revenue from guide and magazine subscriptions is deferred and recognized
over the subscription term.
8. REVENUE RECOGNITION
The Company receives commissions based upon tickets sold to athletic
events, concerts and shows. These tickets are sold through outlet locations and
via the telephone. Commissions and convenience fees are earned on ticket sales
on the accrual basis as tickets are sold.
F-54
<PAGE> 128
TICKETMASTER OF DELAWARE VALLEY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS
ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED)
NOTE A -- SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Certain of the Company's assets and liabilities include amounts related to
ticket sales that occurred at outlet locations or via the telephone. Included in
accounts receivable are monies due from outlets for ticket sales of
approximately $622,049 and $343,000 at June 30, 1996 and December 31, 1995,
respectively. Accounts payable -- Venues include amounts from outlets and
telephone sales that have not yet been due to clients.
9. INCOME TAXES
The Company has elected to be taxed pursuant to Subchapter "S" of the
Internal Revenue Code. Accordingly, federal income taxes or credits accrue
personally to the stockholders. The Company elected Subchapter "S" treatment for
some states while remaining subject to corporate tax in other states.
NOTE B -- RELATED PARTY TRANSACTIONS
During 1993, the Company purchased a $2,500,000 second mortgage note of an
affiliated entity from a financial institution for $100,000. The Company
received payment of the $100,000 purchase price during 1995.
The Company sells tickets for events held at the CoreStates Spectrum,
located in Philadelphia, Pennsylvania, an affiliate's place of business. The
Company provides this affiliate with a rebate that is based upon tickets sold
for events to be held at this arena. Total rebates relating to the tickets sold
amounted to approximately $260,000 for the six months ended June 30, 1996 and
1995, and $525,000 for the year ended December 31, 1995. Payables to this
affiliate totalled approximately $2,500 at June 30, 1996 and December 31, 1995.
The Company also reimbursed this affiliate for expenses paid on its behalf
totalling approximately $13,000 and $10,000 the six months ended June 30, 1996
and 1995, and $25,000 for the year ended December 31, 1995.
The Company provides services to and purchases services from other
affiliates which are related by common ownership or control. Total revenue from
these affiliates amounted to $10,000 for the year ended December 31, 1995. Total
expenses to these affiliates amounted to approximately $59,000 and $57,000 for
the six months ended June 30, 1996 and 1995, and $119,000 for the year ended
December 31, 1995. Payables to these affiliates totalled approximately $13,000
and $10,000 at June 30, 1996 and December 31, 1995, respectively. The Company
also reimbursed affiliates for expenses paid on its behalf totalling
approximately $1,500 and $5,000 for the six months ended June 30, 1996 and 1995,
and $11,000 for the year ended December 31, 1995. There were no amounts due to
those affiliates relating to these reimbursements at June 30, 1996 or December
31, 1995.
During 1995, the Company reached a settlement with a former stockholder in
connection with the sale of his stock back to the Company. Settlement of this
matter did not have a material effect on the financial position of the Company.
NOTE C -- SHORT-TERM BORROWINGS
The Company has a $400,000 demand line of credit with a bank that is
secured by the Company's equipment and furniture. The line of credit bears
interest at the prime rate plus 1/2% (8.75% at June 30, 1996) and is payable
monthly. At June 30, 1996, the entire line of credit was available to the
Company.
F-55
<PAGE> 129
TICKETMASTER OF DELAWARE VALLEY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE SIX MONTHS
ENDED JUNE 30, 1996 AND 1995 IS UNAUDITED)
NOTE D -- PENSION PLAN
The Company is a plan sponsor and is participating in a defined
contribution plan (profit-sharing plan) with a 401(k) feature with other related
entities. The Company has elected to contribute to the plan 50% of the first 5%
of participant contributions. Plan eligibility is defined in the Spectacor
Profit-Sharing Plan Summary Plan Description. Contributions are discretionary
and will be determined annually by the Company. Contribution expense was
approximately $4,600, $6,000 and $9,000 for the six months ended June 30, 1996
and 1995 and the year ended December 31, 1995, respectively.
NOTE E -- COMMITMENTS
The Company has leases with various terms for office space, equipment and
automobiles. The following is a summary of approximate future minimum rental
commitments under operating leases that have remaining non-cancelable lease
terms in excess of one year as of June 30, 1996:
<TABLE>
<S> <C>
1997...................................................... $117,000
1998...................................................... 110,000
1999...................................................... 109,000
2000...................................................... 109,000
Thereafter................................................ --
--------
$445,000
</TABLE>
Total rent expense under these leases was approximately $63,000 for the six
months ended June 30, 1996 and 1995, and $126,000 for the year ended December
31, 1995. Included in rent expense is the Company's share of operating expenses
for its leased office space.
NOTE F -- STOCK PURCHASE AGREEMENT
The Company retains the right to purchase the stock of certain stockholders
in accordance with an Agreement between the Company and these stockholders.
F-56
<PAGE> 130
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT
IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Summary Financial Data................. 6
Risk Factors........................... 9
Use of Proceeds........................ 12
Dividend Policy........................ 12
Dilution............................... 13
Capitalization......................... 14
Selected Financial Data................ 15
Pro Forma Financial Information........ 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 23
Business............................... 38
Management............................. 54
Certain Transactions................... 65
Principal Shareholders................. 67
Description of Certain Indebtedness.... 68
Description of Capital Stock........... 69
Shares Eligible for Future Sale........ 70
Underwriting........................... 72
Legal Matters.......................... 73
Experts................................ 73
Available Information.................. 73
Index to Financial Statements.......... F-1
</TABLE>
------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
SHARES
[LOGO]
TICKETMASTER
GROUP, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
ALLEN & COMPANY
INCORPORATED
LAZARD FRERES & CO. LLC
SMITH BARNEY INC.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 131
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered, other than underwriting discounts. All of the amounts shown are
estimated except the Securities and Exchange Commission registration fee, The
Nasdaq Stock Market listing fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee............................................. $39,655.17
The NASDAQ Stock Market listing fee.............................. *
NASD filing fee.................................................. 12,000.00
Blue Sky filing fees and expenses................................ *
Printing and engraving expenses.................................. *
Legal fees and expenses.......................................... *
Accounting fees and expenses..................................... *
Transfer agent and registrar fees................................ *
Miscellaneous.................................................... *
----------
Total............................................................ $ *
==========
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 8.75 of the ICBA empowers a corporation, subject to certain
limitations, to indemnify its directors and officers against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any suit or proceeding to which
they are a party so long as they acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to a criminal action or proceeding, so long as they had no
reasonable cause to believe their conduct to have been unlawful. The
Registrant's Articles provide that the Registrant shall indemnify its directors
and officers to the fullest extent permitted by Section 8.75 of the ICBA.
Section 2.10 of the ICBA permits an Illinois corporation to include in its
articles of incorporation a provision eliminating or limiting a director's
personal liability to a corporation or its shareholders for monetary damages for
breaches of fiduciary duty. The enabling statute provides, however, that
liability for breaches of the duty of loyalty, acts or omissions not in good
faith or involving intentional misconduct or knowing violation of the law,
improper distributions or the receipt of improper personal benefits cannot be
eliminated or limited in this manner. The Registrant's Articles include a
provision which eliminates, to the fullest extent permitted, director liability
for monetary damages for breaches of fiduciary duty.
The Registrant has agreed to indemnify each director and officer pursuant
to an Indemnity Agreement from and against any and all expenses, losses, damages
and liabilities incurred by such director or officer for or as a result of
actions taken or not taken while such director or officer was acting in his or
her capacity as a director, officer, employee or agent of the Registrant.
The Registrant has purchased liability coverage for its officers and
directors insuring such officers and directors against losses arising from any
wrongful act in his or her capacity as an officer or director.
The form of Underwriting Agreement filed as Exhibit 1.1 provides for the
indemnification of the Registrant, its controlling persons, its directors and
its officers by the Underwriters against certain liabilities, including
liabilities under the securities laws.
II-1
<PAGE> 132
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The shares of Common Stock of the Registrant issued in the transactions
described below reflect a 1-for-3 reverse stock split to take place prior to the
effective date of the Offering contemplated by this registration statement.
On December 15, 1993, the Registrant issued 12,233,014 shares of Common
Stock to Paul G. Allen in consideration of the payment of $173 million. On
December 15, 1993, the Registrant also acquired all shares of capital stock of
the Registrant's subsidiary, TM Movie Tix, Inc., held by Fredric D. Rosen and
the Rosen Family Foundation for an aggregate cash purchase price of $6.3 million
and 306,208 shares of Common Stock. See "Principal Shareholders." During 1993
and 1994, the Registrant granted to five employees of the Registrant options to
purchase an aggregate of 1,596,451 shares of Common Stock. On June 7, 1996, the
Registrant issued an Exchangeable Promissory Note in the principal amount of $5
million to Warner Music International Services Limited, which note is
exchangeable in certain circumstances into shares of Common Stock. On August 21,
1996, the Registrant granted to each director who was not an employee or the
beneficial owner of 5% or more of the outstanding Common Stock options to
purchase 25,000 shares of Common Stock.
No underwriters were involved in the transactions described above. The
Registrant believes that the issuance of the aforesaid shares of Common Stock,
the grant of the aforesaid options and the issuance of the aforesaid note were
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof and Regulation S promulgated thereunder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ---------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.1* Specimen of Stock Certificate for Common Stock
4.2 Exchangeable Promissory Note dated June 7, 1996 from the Company to Warner
Music International Services Limited
5.1* Opinion of Neal, Gerber & Eisenberg
10.1 Credit Agreement dated as of November 18, 1994 among the Company, its
lenders and Wells Fargo Bank, National Association, as agent (the "Credit
Agreement")
10.2 First Amendment to Credit Agreement dated as of January 6, 1995
10.3 Second Amendment to Credit Agreement dated as of January 30, 1995
10.4 Third Amendment and Limited Waiver to Credit Agreement dated as of April 7,
1995
10.5 Fourth Amendment and Limited Waiver to Credit Agreement dated as of August
28, 1995
10.6 Waiver to Credit Agreement dated as of April 30, 1996
10.7 Fifth Amendment to Credit Agreement dated as of June 6, 1996
10.8 Third Party Pledge Agreement dated as of November 18, 1994, as amended
effective August 28, 1995, between Paul G. Allen and Wells Fargo Bank,
National Association
10.9 First Amended and Restated Credit Agreement dated as of July 31, 1996
between Pacer/CATS/CCS and U.S. Bank of Washington, National Association
10.10 Employment Agreement dated as of December 15, 1993 between the Company and
Fredric D. Rosen
</TABLE>
II-2
<PAGE> 133
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ---------------------------------------------------------------------------
<C> <S>
10.11 Employment Agreement dated as of February 1, 1994 between the Company and
Marc Bension
10.12 Amendment to Employment Agreement dated as of January 31, 1996 between the
Company and Marc Bension
10.13 Employment Agreement dated as of February 1, 1994 between the Company and
Ned S. Goldstein
10.14 Employment Agreement dated as of February 1, 1994 between the Company and
Peter B. Knepper
10.15 Employment Agreement dated as of February 1, 1994 between the Company and
Ann Mooney
10.16 Employment Agreement dated as of November 1, 1995 between the Company and
Stuart W. DePina
10.17 Employment Agreement dated as of March 1, 1995 between the Company and Judy
A. Black
10.18 Employment Agreement dated as of December , 1994 between the Company and
Alan Citron
10.19 Employment Agreement dated as of May 31, 1995 between the Company and
Claire Rothman
10.20 Employment Agreement dated as of February , 1995 between the Company and
Carole Ference
10.21 Employment Agreement dated as of January 3, 1995 between the Company and
Annie Gilbar
10.22 Stock Option Agreement, dated December 15, 1993 between the Company and
Fredric D. Rosen
10.23 Ticketmaster 401(k) Savings Plan and Trust Agreement, as Amended and
Restated Effective October 1, 1994
10.24 Ticketmaster Stock Plan (as amended and restated)
10.25 Covenant Not to Compete, dated November 19, 1993 between the Company and
Fredric D. Rosen
10.26 Covenant Not to Compete, dated November 19, 1993 between the Company and
Robert A. Leonard
10.27 Registration Rights Agreement dated as of December 15, 1993 between the
Company and Paul Allen
10.28 Registration and Exchange Rights Agreement dated as of December 15, 1993
among the Company, HG, Inc., Wells Fargo & Company, Rockwood & Co., Richard
L. Schulze, Harold S. Handelsman and Fredric D. Rosen
10.29 Covenant Not to Compete dated December 15, 1993 among HG, Inc., the Company
and Paul Allen
10.30 Covenant Not to Compete dated December 15, 1993 among Fredric D. Rosen, the
Company and Paul Allen
10.31 Covenant Not to Compete dated December 15, 1993 among Robert A. Leonard,
the Company and Paul Allen
10.32 Covenant Not to Compete dated December 15, 1993 between Fredric D. Rosen
and TM Movie Tix, Inc.
</TABLE>
II-3
<PAGE> 134
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ---------------------------------------------------------------------------
<C> <S>
10.33 Shareholders' Agreement dated as of December 15, 1993 among the
shareholders of the Company
10.34* Form of Indemnity Agreement between the Company and each of its officers
and directors
10.35* Development and Services Agreement dated , 1996 Ticketmaster
Multimedia Holdings, Inc. and Starwave Corp.
21.1* Subsidiaries of the Registrant
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Grant Thornton LLP
23.3* Consent of Neal, Gerber & Eisenberg (included as part of Exhibit 5.1)
24.1 Powers of Attorney (included on pages II-7 and II-8)
27.1 Financial Data Schedule
99.1 Release, dated July 5, 1995, of the Antitrust Division of the United States
Department of Justice
</TABLE>
- ---------------
* To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULE:
Valuation and Qualifying Accounts, Pacer/CATS/CCS
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions (see response to Item 14 above),
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in said Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each posteffective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles and the State
of California on the day of September 20, 1996.
TICKETMASTER GROUP, INC.,
an Illinois corporation
By: /S/ FREDRIC D. ROSEN
-----------------------------------
Fredric D. Rosen
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Ticketmaster Group, Inc.,
hereby severally constitute Fredric D. Rosen, Ned S. Goldstein and Peter B.
Knepper, and each of them singly, our true and lawful attorneys with full power
to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, any and all amendments, including post-effective
amendments, to this registration statement, and generally to do all such things
in our name and behalf in such capacities to enable Ticketmaster Group, Inc. to
comply with the applicable provisions of the Securities Act of 1933, as amended,
and all requirements of the Securities and Exchange Commission, and we hereby
ratify and confirm our signatures as they may be signed by our said attorneys,
or any of them, to any and all such amendments.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on September 20, 1996 by the following
persons in the capacities indicated.
<TABLE>
<S> <C>
/S/ PAUL G. ALLEN Chairman of the Board
- -----------------------------------------------
Paul G. Allen
/S/ FREDRIC D. ROSEN President, Chief Executive Officer and
- ----------------------------------------------- Director (Principal Executive Officer)
Fredric D. Rosen
/S/ PETER B. KNEPPER Senior Vice President and Chief Financial
- ----------------------------------------------- Officer (Principal Financial and
Peter B. Knepper Accounting Officer)
/S/ CHARLES EVANS GERBER Director
- -----------------------------------------------
Charles Evans Gerber
/S/ DAVID E. LIDDLE Director
- -----------------------------------------------
David E. Liddle
/S/ JOHN A. PRITZKER Director
- -----------------------------------------------
John A. Pritzker
/S/ WILLIAM D. SAVOY Director
- -----------------------------------------------
William D. Savoy
/S/ TERENCE M. STROM Director
- -----------------------------------------------
Terence M. Strom
</TABLE>
II-5
<PAGE> 136
SCHEDULE II
PACER/CATS/CCS - A WEMBLEY
TICKETMASTER JOINT VENTURE
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
COLUMN C
------------------------------
ADDITIONS COLUMN E
COLUMN B ------------------------------ --------
---------- (1) (2) COLUMN D BALANCE
COLUMN A BALANCE AT CHARGED TO CHARGED TO ---------- AT END
- -------------------------------------- BEGINNING COSTS OTHER ACCOUNTS DEDUCTIONS OF
DESCRIPTION OF PERIOD AND EXPENSES DESCRIBE DESCRIBE PERIOD
- -------------------------------------- ---------- ------------ -------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Allowance deducted from assets to
which it applies
Allowance for doubtful accounts:
Year ended December 31, 1995..... $1,479 $ 343 $0 $356(A) $1,266
Period ended December 31, 1994... 492 1,237 0 250(A) 1,479
</TABLE>
- ---------------
Note A -- Uncollected receivables written off, net of recoveries.
S-1
<PAGE> 137
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ---------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.1* Specimen of Stock Certificate for Common Stock
4.2 Exchangeable Promissory Note dated June 7, 1996 from the Company to Warner
Music International Services Limited
5.1* Opinion of Neal, Gerber & Eisenberg
10.1 Credit Agreement dated as of November 18, 1994 among the Company, its
lenders and Wells Fargo Bank, National Association, as agent (the "Credit
Agreement")
10.2 First Amendment to Credit Agreement dated as of January 6, 1995
10.3 Second Amendment to Credit Agreement dated as of January 30, 1995
10.4 Third Amendment and Limited Waiver to Credit Agreement dated as of April 7,
1995
10.5 Fourth Amendment and Limited Waiver to Credit Agreement dated as of August
28, 1995
10.6 Waiver to Credit Agreement dated as of April 30, 1996
10.7 Fifth Amendment to Credit Agreement dated as of June 6, 1996
10.8 Third Party Pledge Agreement dated as of November 18, 1994, as amended
effective August 28, 1995, between Paul G. Allen and Wells Fargo Bank,
National Association
10.9 First Amended and Restated Credit Agreement dated as of July 31, 1996
between Pacer/CATS/CCS and U.S. Bank of Washington, National Association
10.10 Employment Agreement dated as of December 15, 1993 between the Company and
Fredric D. Rosen
10.11 Employment Agreement dated as of February 1, 1994 between the Company and
Marc Bension
10.12 Amendment to Employment Agreement dated as of January 31, 1996 between the
Company and Marc Bension
10.13 Employment Agreement dated as of February 1, 1994 between the Company and
Ned S. Goldstein
10.14 Employment Agreement dated as of February 1, 1994 between the Company and
Peter B. Knepper
10.15 Employment Agreement dated as of February 1, 1994 between the Company and
Ann Mooney
10.16 Employment Agreement dated as of November 1, 1995 between the Company and
Stuart W. DePina
10.17 Employment Agreement dated as of March 1, 1995 between the Company and Judy
A. Black
10.18 Employment Agreement dated as of December , 1994 between the Company and
Alan Citron
10.19 Employment Agreement dated as of May 31, 1995 between the Company and
Claire Rothman
10.20 Employment Agreement dated as of February , 1995 between the Company and
Carole Ference
</TABLE>
<PAGE> 138
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ---------------------------------------------------------------------------
<C> <S>
10.21 Employment Agreement dated as of January 3, 1995 between the Company and
Annie Gilbar
10.22 Stock Option Agreement, dated December 15, 1993 between the Company and
Fredric D. Rosen
10.23 Ticketmaster 401(k) Savings Plan and Trust Agreement, as Amended and
Restated Effective October 1, 1994
10.24 Ticketmaster Stock Plan (as amended and restated)
10.25 Covenant Not to Compete, dated November 19, 1993 between the Company and
Fredric D. Rosen
10.26 Covenant Not to Compete, dated November 19, 1993 between the Company and
Robert A. Leonard
10.27 Registration Rights Agreement dated as of December 15, 1993 between the
Company and Paul Allen
10.28 Registration and Exchange Rights Agreement dated as of December 15, 1993
among the Company, HG, Inc., Wells Fargo & Company, Rockwood & Co., Richard
L. Schulze, Harold S. Handelsman and Fredric D. Rosen
10.29 Covenant Not to Compete dated December 15, 1993 among HG, Inc., the Company
and Paul Allen
10.30 Covenant Not to Compete dated December 15, 1993 among Fredric D. Rosen, the
Company and Paul Allen
10.31 Covenant Not to Compete dated December 15, 1993 among Robert A. Leonard,
the Company and Paul Allen
10.32 Covenant Not to Compete dated December 15, 1993 between Fredric D. Rosen
and TM Movie Tix, Inc.
10.33 Shareholders' Agreement dated as of December 15, 1993 among the
shareholders of the Company
10.34* Form of Indemnity Agreement between the Company and each of its officers
and directors
10.35* Development and Services Agreement dated , 1996 Ticketmaster
Multimedia Holdings, Inc. and Starwave Corp.
21.1* Subsidiaries of the Registrant
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Grant Thornton LLP
23.3* Consent of Neal, Gerber & Eisenberg (included as part of Exhibit 5.1)
24.1 Powers of Attorney (included on pages II-7 and II-8)
27.1 Financial Data Schedule
99.1 Release, dated July 5, 1995, of the Antitrust Division of the United States
Department of Justice
</TABLE>
- ---------------
* To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULE:
Valuation and Qualifying Accounts, Pacer/CATS/CCS
<PAGE>
EXHIBIT 3
ARTICLES OF AMENDMENT OF
TICKETMASTER GROUP, INC.
It is hereby certified that:
1. The present name of the corporation is Ticketmaster Group, Inc. The
corporation was originally incorporated on January 20, 1988 under the name
Ticketmaster Holdings Group, Ltd. The corporate name was changed on
September 22, 1994.
2. The name and address of the registered agent of the corporation on the
date hereof is The Prentice-Hall Corporation System, Inc., 33 North LaSalle
Street, Chicago, Illinois, 60602.
3. The number of shares of each class of capital stock of the
corporation issued on the date hereof and the amount of paid-in capital as of
such date is:
<TABLE>
<CAPTION>
Number of
Par Value Shares Paid-In
Class Series Per Share Issued Capital
----- ------ --------- ---------- --------
<S> <C> <C> <C> <C>
Common A no par value 15,310,404 $3,705,000
</TABLE>
4. The text of the Articles of Incorporation as amended and restated is
as follows:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF TICKETMASTER HOLDINGS GROUP, LTD.
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is Ticketmaster Group, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of Illinois
is 33 North LaSalle Street, in the City of Chicago, County of Cook. The name of
the Corporation's registered agent at such address is The Prentice-Hall
Corporation System, Inc.
ARTICLE III
The purpose for which the Corporation is organized is the transaction of
any or all lawful businesses for which corporations
<PAGE>
may be incorporated under the Illinois Business Corporation Act of 1983, as
the same may be amended from time to time (the "BCA").
ARTICLE IV
A. CLASSES AND NUMBER OF SHARES.
The total number of shares of all classes of capital stock that the
Corporation shall have authority to issue is one hundred million (100,000,000)
shares, consisting of eighty million (80,000,000) shares of common stock, no par
value (the "Common Stock"), and twenty million (20,000,000) shares of
undesignated preferred stock, no par value (the "Preferred Stock").
B. PREFERRED STOCK.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to provide for the issuance
of shares of Preferred Stock in series and, by filing a certificate pursuant to
the applicable law of the State of Illinois (hereinafter referred to as a
"Preferred Stock Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. The authority of the Board of Directors
with respect to each series shall include, but not be limited to, determination
of the following:
(i) The designation of the series, which may be by
distinguishing number, letter or title.
(ii) The number of shares of the series, which number the Board
of Directors may thereafter (except where otherwise provided in the
Preferred Stock Designation) increase or decrease (but not below the number
of shares thereof then outstanding).
(iii) Whether dividends, if any, shall be cumulative or
noncumulative and the dividend rate of the series.
(iv) Dates at which dividends, if any, shall be payable.
(v) The redemption rights and price or prices, if any, for
shares of the series.
-2-
<PAGE>
(vi) The terms and amounts of any sinking fund provided for the
purchase or redemption of shares of the series.
(vii) The amounts payable on shares of the series in the
event of any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation.
(viii) Whether the shares of the series shall be convertible
into shares of any other class or series, or any other security, of the
Corporation or any other corporation, and, if so, the specification of such
other class or series of such other security, the conversion price or
prices or rate or rates, any adjustments thereof, the date or dates on
which such shares shall be convertible and all other terms and conditions
upon which such conversion may be made.
(ix) Restrictions on the issuance of shares of the same series or
of any other class or series.
(x) The voting rights, if any, of the holders of shares of the
series.
C. COMMON STOCK.
(1) COMMON STOCK SUBJECT TO TERMS OF PREFERRED STOCK. The Common
Stock shall be subject to the express terms of the Preferred Stock and any
series thereof.
(2) DIVIDEND RIGHTS. The holders of shares of the Common Stock shall
be entitled to receive such dividends as may be declared by the Board of
Directors of the Corporation out of funds legally available therefor.
(3) RIGHTS UPON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of shares of the Common Stock shall
be entitled to receive, ratably with each other holder of shares of Common
Stock, that portion of the assets of the Corporation available for distribution
to the holders of its Common Stock, as the number of shares of the Common Stock
held by such holder bears to the total number of shares of Common Stock then
outstanding.
(4) VOTING RIGHTS. Except as may be provided in these Articles of
Incorporation or in a Preferred Stock Designation, the holders of shares of the
Common Stock shall have the exclusive right to vote on all matters (for which a
common shareholder shall be entitled to vote thereon) at all meetings of the
shareholders of the Corporation, and shall be entitled to one vote for each
share of the Common Stock entitled to vote at such meeting.
-3-
<PAGE>
ARTICLE V
(a) In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to (i) make, alter,
amend or repeal all or any provision of the By-laws of the Corporation;
PROVIDED, however, that a majority of the voting power of the then outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors (the "Voting Stock"), voting together as a single class,
may alter, amend or repeal any provision of the By-laws, and (ii) from time to
time determine whether and to what extent, and at what times and places, and
under what conditions and regulations, the accounts and books of the
Corporation, or any of them, shall be open to inspection of shareholders; and,
except as so determined or as provided in any Preferred Stock Designation, no
shareholder shall have any right to inspect any account, book or document of the
Corporation other than such rights as may be conferred by applicable law.
(b) The Corporation may in its By-laws confer powers upon the
Board of Directors in addition to the foregoing and in addition to the powers
and authorities expressly conferred upon the Board of Directors by applicable
law. Notwithstanding anything contained in these Articles of Incorporation to
the contrary, the affirmative vote of the holders of a majority of the then
outstanding Voting Stock, voting together as a single class, shall be required
to amend, repeal or adopt any provision inconsistent with paragraph (a) of this
Article V.
(c) In connection with any matter which shall require for its
adoption the affirmative vote of the holders of at least two-thirds of the
outstanding shares entitled to vote on such matter or the affirmative vote of
the holders of at least two-thirds of the outstanding shares of each class or
series of shares entitled to vote as a class on such matter, said two-thirds
vote requirement is hereby superseded pursuant to the authority granted by the
BCA and such matter shall be authorized by the affirmative vote of the holders
of a majority of the outstanding shares entitled to vote on such matter and, if
required by law, the affirmative vote of holders of a majority of the
outstanding shares of each class or series of shares entitled to vote as a class
on such matter.
ARTICLE VI
(a) Subject to the rights of the holders of any series of
Preferred Stock as set forth in a Preferred Stock Designation to elect
additional directors under specified circumstances, the number of directors of
the Corporation shall be fixed by the By-laws of the Corporation and may be
increased or
-4-
<PAGE>
decreased from time to time in such a manner as may be prescribed by
the By-laws.
(b) Cumulative voting for the election of directors of the
Corporation shall not be permitted.
(c) Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
(d) The directors, other than those who may be elected by the
holders of any series of Preferred Stock, shall be elected for one year terms at
each annual meeting of shareholders. Each director shall hold office until his
or her successor shall have been duly elected and qualified.
(e) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, any
director, or the entire Board of Directors, may be removed from office at any
time, with or without cause, by the affirmative vote of the holders of at least
a majority of the then outstanding Voting Stock, voting together as a single
class.
(f) Notwithstanding anything contained in these Articles of
Incorporation to the contrary, the affirmative vote of the holders of a majority
of the then outstanding Voting Stock, voting together as a single class, shall
be required to amend, repeal or adopt any provision inconsistent with this
Article VI.
ARTICLE VII
The Corporation shall, to the fullest extent permitted by Section 8.75 of
the BCA, as amended from time to time, indemnify all officers and directors of
the Corporation and advance expenses reasonably incurred by all officers and
directors of the Corporation.
ARTICLE VIII
To the fullest extent permitted by the BCA, as amended from time to time, a
director of the Corporation shall not be liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 8.65 of the BCA or (iv) for any transaction from which the director
derived an improper personal benefit.
-5-
<PAGE>
ARTICLE IX
In determining what is in the best interest of the Corporation, a director
of the Corporation shall consider the interests of the shareholders of the
Corporation and, in his or her discretion, may consider (a) the interests of the
Corporation's employees, suppliers, creditors and customers, (b) the economy of
the nation, (c) community and societal interests and (d) the long-term as well
as short-term interests of the Corporation and its shareholders, including the
possibility that these interests may be best served by the continued
independence of the Corporation.
ARTICLE X
The Corporation reserves the right at any time and from time to time to
amend, alter, change or repeal any provision contained in these Articles of
Incorporation or a Preferred Stock Designation, and any other provisions
authorized by the laws of the State of Illinois at the time in force may be
added or inserted in the manner now or hereafter prescribed herein or by
applicable law, and all rights, preferences and privileges of whatsoever nature
conferred upon shareholders, directors or any other persons whomsoever by and
pursuant to these Articles of Incorporation in their present form or as
hereafter amended are granted subject to the rights reserved in this Article X;
PROVIDED, HOWEVER, that any amendment or repeal of Article VII or Article VIII
of these Articles of Incorporation shall not adversely affect any right or
protection existing hereunder immediately prior to such amendment or repeal.
-6-
<PAGE>
EXHIBIT 4
AMENDED AND RESTATED
BYLAWS
OF
TICKETMASTER GROUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1 ILLINOIS OFFICE. The principal office of the Corporation in
the State of Illinois shall be located in the City of Chicago, County of Cook,
and the name and address of its registered agent is The Prentice-Hall
Corporation System, Inc., 33 North LaSalle Street, Chicago, Illinois,
60602-2607.
SECTION 1.2 OTHER OFFICES. The Corporation may have such other offices,
either within or without the State of Illinois, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
SECTION 1.3 BOOKS AND RECORDS. The books and records of the Corporation
may be kept outside the State of Illinois at such place or places as may from
time to time be designated by the Board of Directors.
ARTICLE II
SHAREHOLDERS
SECTION 2.1 ANNUAL MEETING. The annual meeting of the shareholders of
the Corporation shall be held on the fourth Thursday in April of each year, if
not a legal holiday, and if a legal holiday then on the next succeeding business
day at 10:00 a.m., local time, at the principal executive offices of the
Corporation, or at such other date, place and/or time as may be fixed by
resolution of the Board of Directors.
SECTION 2.2 SPECIAL MEETING. Subject to the rights of the holders of
any series of preferred stock of the Corporation (the "Preferred Stock") to
elect additional directors under specified circumstances or as otherwise
provided under Illinois law, special meetings of the shareholders may be called
only by the Chairman of the Board, the President, the Board of Directors
pursuant to a resolution adopted by a majority of the total number of directors
which the Corporation would have if there were no vacancies, or by holders of
not less than one-fifth of all the outstanding shares entitled to vote on the
matter for which the meeting is called.
SECTION 2.3 PLACE OF MEETING. The Board of Directors may designate the
place of meeting for any meeting of the shareholders.
<PAGE>
If no designation is made by the Board of Directors, the place of meeting
shall be the principal office of the Corporation.
SECTION 2.4 NOTICE OF MEETING. Written or printed notice, stating the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be prepared and
delivered by the Corporation not less than ten days nor more than sixty days
before the date of the meeting, or in the case of a merger, consolidation, share
exchange, dissolution or sale, lease or exchange of assets, not less than twenty
nor more than sixty days before the date of the meeting, either personally, or
by mail, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail with postage thereon prepaid, addressed to the shareholder at his
address as it appears on the stock transfer books of the Corporation. Such
further notice shall be given as may be required by law. Meetings may be held
without notice if all shareholders entitled to vote are present, or if notice is
waived by those not present. Any previously scheduled meeting of the
shareholders may be postponed by resolution of the Board of Directors upon
public notice given prior to the date previously scheduled for such meeting of
the shareholders.
SECTION 2.5 RECORD DATE. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, or shareholders
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty days and, for a meeting of
shareholders, not less than ten days, or in the case of a merger, consolidation,
share exchange, dissolution or sale, lease or exchange of assets, not less than
twenty days, immediately preceding such meeting. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
SECTION 2.6 VOTING LIST. The officer or agent who has charge of the
stock transfer books for shares of the Corporation shall make, within twenty
days after the record date for a meeting of shareholders or ten days prior to
such meeting, whichever is earlier, a complete list of the shareholders entitled
to vote at such meeting, arranged in alphabetical order and indicating the
address of and number of shares held by each, which list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office of
the Corporation and shall be subject to
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the examination of any shareholder, or his or her duly authorized legal
representative, at any time during ordinary business hours. Such list shall
also be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder during the whole time of the
meeting. The original share ledger or transfer book, or a duplicate thereof
kept in the State of Illinois, shall be prima facie evidence as to who are
the shareholders entitled to examine such list or share ledger or transfer
book or to vote at any meeting of shareholders.
SECTION 2.7 QUORUM AND ADJOURNMENT. Except as otherwise provided by law
or by the Articles of Incorporation, the holders of a majority of the
outstanding shares of the Corporation entitled to vote generally in the election
of directors (the "Voting Stock"), represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders, except that when specified
business is to be voted on by a class or series voting as a class, the holders
of a majority of the shares of such class or series, represented in person or by
proxy, shall constitute a quorum for the transaction of such business. The
chairman of the meeting or a majority of the shares so represented may adjourn
the meeting from time to time, whether or not there is such a quorum. No notice
of the time and place of adjourned meetings need be given except as required by
law. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
SECTION 2.8 PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder, or by his duly authorized
attorney-in-fact. Such proxy must be filed with the Secretary of the
Corporation or his representative at or before the time of the meeting. No
proxy shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
SECTION 2.9 NOTICE OF SHAREHOLDER BUSINESS AND NOMINATIONS.
(A) ANNUAL MEETINGS OF SHAREHOLDERS.
(1) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders (a) pursuant to
the Corporation's notice of meeting delivered pursuant to Section 2.4 of these
Bylaws, (b) by or at the direction of the Chairman of the Board or the Board of
Directors or (c) by any shareholder of the Corporation who is entitled to vote
at the meeting, who complied with the notice procedures set forth in clauses (2)
and (3) of this paragraph (A) of this Bylaw and who was a shareholder of record
at the time such notice is delivered to the Secretary of the Corporation.
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(2) For nominations or other business to be properly brought before
an annual meeting by a shareholder pursuant to clause (c) of paragraph (A)(1) of
this Bylaw the shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the Corporation
not less than sixty days nor more than ninety days prior to the first
anniversary of the preceding year's annual meeting; PROVIDED, HOWEVER, that in
the event that the date of the annual meeting is advanced by more than thirty
days or delayed by more than sixty days from such anniversary date, notice by
the shareholder to be timely must be so delivered not earlier than the ninetieth
day prior to such annual meeting and not later than the close of business on the
later of the sixtieth day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made. Such shareholder's notice shall set forth (a) as to each person
whom the shareholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, or any similar or successor federal statute, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder, all as the same shall be in effect at the time (the "Exchange Act"),
including such person's written consent to being named in the proxy statement as
a nominee and to serving as a director if elected; (b) as to any other business
that the shareholder proposes to bring before the meeting, a brief description
of the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (c) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Bylaw to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the Corporation
at least seventy days prior to the first anniversary of the preceding year's
annual meeting, a shareholder's notice required by this Bylaw shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be
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delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth day following
the day on which such public announcement is first made by the Corporation.
(B) SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall be
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting pursuant to Section
2.4 of these Bylaws. Nominations of persons for election to the Board of
Directors may be made at a special meeting of shareholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or at
the direction of the Chairman of the Board or the Board of Directors or (b) by
any shareholder of the Corporation who is entitled to vote at the meeting, who
complies with the notice procedures set forth in this Bylaw and who is a
shareholder of record at the time such notice is delivered to the Secretary of
the Corporation. Nominations by shareholders of persons for election to the
Board of Directors may be made at such a special meeting of shareholders if the
shareholder's notice required by paragraph (A)(2) of this Bylaw shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the ninetieth day prior to such special meeting and not later
than the close of business on the later of the seventieth day prior to such
special meeting or the tenth day following the day on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.
(C) GENERAL.
(1) Only persons who are nominated in accordance with the procedures
set forth in this Bylaw shall be eligible to serve as directors and only such
business shall be conducted at a meeting of shareholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Bylaw. Except as otherwise provided by law, the Articles of Incorporation or
these Bylaws, the chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this Bylaw and,
if any proposed nomination or business is not in compliance with this Bylaw, to
declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
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(3) Notwithstanding the foregoing provisions of this Bylaw, a
shareholder shall also comply with all applicable requirements of the Exchange
Act with respect to the matters set forth in this Bylaw. Nothing in this Bylaw
shall be deemed to affect any rights of shareholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
SECTION 2.10 INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS.
(A) The Board of Directors by resolution may appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives of the Corporation, to act at the meeting
and make a written report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate has been appointed to act, or if all inspectors or alternates who
have been appointed are unable to act, at a meeting of shareholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by the Illinois Business Corporation Act of
1983, as the same may be amended from time to time (the "BCA").
(B) The chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter upon
which the shareholders will vote at the meeting.
SECTION 2.11 VOTE OF SHAREHOLDERS. Subject to the rights of the holders
of any series of Preferred Stock to elect directors under specified
circumstances, each shareholder having the right to vote shall be entitled at
every meeting of shareholders to one vote upon each matter submitted to a vote
of the shareholders for every share standing in his name on the record date
fixed by the Board of Directors pursuant to Section 2.5 of these Bylaws. Except
as otherwise provided by law, the Articles of Incorporation, any Preferred Stock
Designation, these Bylaws or any resolution adopted by a majority of the Board
of Directors, if a quorum is present at any meeting, the affirmative vote of the
holders of a majority of the shares entitled to vote and represented at such
meeting shall be the act of the shareholders.
SECTION 2.12 PROCEDURE FOR ELECTION OF DIRECTORS. Election of directors
at all meetings of the shareholders at which directors are to be elected shall
be by written ballot, and, except as
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otherwise set forth in any Preferred Stock Designation (as defined in
Article IV of the Articles of Incorporation) with respect to the right of the
holders of any series of Preferred Stock to elect additional directors under
specified circumstances, at all meetings at which a quorum is present, a
majority of the votes cast thereat shall elect.
SECTION 2.13 VOTING OF SHARES BY CERTAIN HOLDERS. Shares held by the
Corporation in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares entitled to vote at any given
time.
Shares registered in the name of another corporation, domestic or foreign,
may be voted by any officer, agent, proxy or other legal representative
authorized to vote such shares under the laws of incorporation of such
corporation.
Shares registered in the name of a deceased person, a minor ward or a
person under legal disability may be voted by his or her administrator, executor
or court-appointed guardian, or conservator, either in person or by proxy,
without a transfer of such shares into the name of such administrator, executor
or court-appointed guardian.
Shares registered in the name of a trustee may be voted by him, either in
person or by proxy.
Shares registered in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his or her name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Any number of shareholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their shares, for a period not to exceed ten years, by entering into a written
voting trust, and by transferring their shares to such trustee or trustees for
the purpose of the agreement. Any such trust agreement shall not become
effective until a counterpart of the agreement is deposited with the Corporation
at its registered office. The counterpart of the voting trust agreement so
deposited with the Corporation shall be subject to the same right of examination
by a shareholder of the Corporation, in person, by agent or attorney, as is the
record of shareholders of the Corporation, and shall be subject to
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examination by any holder of a beneficial interest in the voting trust,
either in person, by agent or attorney, at any reasonable time for any proper
purpose.
Shares of its own stock belonging to the Corporation shall not be voted,
directly or indirectly, at any meeting and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of its own
stock held by it in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares at any given time.
SECTION 2.14 INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise provided
in the Articles of Incorporation, any action required to be taken at a meeting
of the shareholders, or any other action which may be taken at a meeting of the
shareholders, may be taken without a meeting and without a vote, if a consent in
writing, setting forth the action so taken shall be signed (a) if five days'
prior notice of the proposed action is given in writing to all the shareholders
entitled to vote with respect to the subject matter thereof, by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting, or (b) by all the shareholders
entitled to vote with respect to the subject matter thereof.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given in writing to those
shareholders who have not consented in writing. In the event that the action
which is consented to is such as would have required the filing of a certificate
under any section of the BCA if such action had been voted on by the
shareholders at a meeting thereof, the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of shareholders, that written consent has been given in accordance with the
provisions of Section 7.10 of the BCA and that written notice has been given as
provided in such Section 7.10.
SECTION 2.15 VOTING BY BALLOT. Voting on any question or in any election
may be by voice unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1 GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these Bylaws expressly conferred upon
them, the Board of Directors may exercise all such powers of the Corporation and
do all such
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lawful acts and things as are not by law or by the Articles of Incorporation
or by these Bylaws required to be exercised or done by the shareholders.
SECTION 3.2 NUMBER, TENURE AND QUALIFICATIONS. Subject to the rights of
the holders of any series of Preferred Stock to elect directors under specified
circumstances, the number of directors shall be fixed from time to time
exclusively pursuant to a resolution adopted by a majority of the Board of
Directors, but shall consist of not more than ten nor less than five directors.
In the absence of a resolution fixing the number of directors, the number shall
be fixed at 7. The directors, other than those who may be elected by the
holders of any series of Preferred Stock, shall be elected for one year terms at
each annual meeting of shareholders. Subject to Section 3.10 of these Bylaws,
each director shall hold office until his or her successor shall have been duly
elected and qualified.
SECTION 3.3 REGULAR MEETING. A regular meeting of the Board of
Directors shall be held without notice other than this Bylaw immediately after,
and at the same place as, each annual meeting of shareholders. The Board of
Directors may, by resolution, provide the time and place for the holding of
additional regular meetings without other notice than such resolution.
SECTION 3.4 SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be called at the request of the Chairman of the Board, the
President or a majority of the Board of Directors. The person or persons
authorized to call special meetings of the Board of Directors may fix the place
and time of the meetings.
SECTION 3.5 NOTICE. Notice of any special meeting shall be given to
each director at his business or residence in writing or by telegram, telephone
or facsimile communication. If mailed, such notice shall be deemed adequately
delivered when deposited in the United States mails so addressed, with postage
thereon prepaid, at least five days before such meeting. If by telegram, such
notice shall be deemed adequately delivered when the telegram is delivered to
the telegraph company at least twenty-four hours before such meeting. If by
telephone, the notice shall be given at least twelve hours prior to the time set
for the meeting. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be specified in
the notice of such meeting, except for amendments to these Bylaws as provided
under Section 8.1 hereof. A meeting may be held at any time without notice if
all the directors are present or if those not present waive notice of the
meeting in writing, either before or after such meeting.
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SECTION 3.6 QUORUM. A majority of the Board of Directors shall
constitute a quorum for the transaction of business, but if at any meeting of
the Board of Directors there shall be less than a quorum present, a majority of
the directors present may adjourn the meeting from time to time without further
notice. The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors. The directors
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough directors to leave less
than a quorum.
SECTION 3.7 PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his or her dissent shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered or certified mail to the Secretary
of the Corporation immediately after the adjournment of the meeting. Such right
to dissent shall not apply to a director who voted in favor of such action.
SECTION 3.8 INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of the Board of Directors, or any other action which may be
taken at a meeting of the Board of Directors or a committee thereof, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all the directors entitled to vote with respect to the
subject matter thereof, or by all the members of such committee, as the case may
be. All duly executed consents shall be delivered to the Secretary of the
Corporation to be filed in the Corporate records. The action taken by written
consent shall be effective when all of the directors entitled to vote thereon
have approved the consent in writing, unless the consent specifies a different
effective date. Any such consent signed by all the directors shall have the
same effect as an unanimous vote, and may be stated as such in any document
filed with the Secretary of State of Illinois.
SECTION 3.9 VACANCIES. Subject to the rights of the holders of any
series of Preferred Stock, and unless the Board of Directors otherwise
determines, any vacancy resulting from death, resignation, retirement,
disqualification, removal from office or otherwise, and newly created
directorships resulting from any increase in the authorized number of directors,
may be filled only by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board of Directors, and directors so
chosen shall hold office for a term expiring at the next annual meeting of
shareholders and until such director's successor shall have been duly elected
and qualified. No decrease in the number of
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authorized directors constituting the Board of Directors shall shorten the
term of any incumbent director.
SECTION 3.10 REMOVAL. Subject to the rights of the holders of any series
of Preferred Stock to elect additional directors under specified circumstances,
any director, or the entire Board of Directors, may be removed from office at
any time, with or without cause, by the affirmative vote of the holders of at
least a majority of the then outstanding Voting Stock, voting together as a
single class.
SECTION 3.11 COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the Board of Directors, designate one or
more committees, each committee to consist of two or more directors of the
Corporation, including the following committees:
(a) An Executive Committee, which shall have such authority as shall
be delegated by the Board of Directors and shall advise the Board of
Directors from time to time with respect to such matters as the Board of
Directors shall direct.
(b) An Audit Committee which shall consist of Independent Directors
(as defined below). The Audit Committee shall make recommendations
concerning the engagement of independent public accountants, review with
the independent public accountants the plans and results of the audit
engagement, approve professional services provided by the independent
public accountants, review the independence of the independent public
accountants, consider the range of audit and non-audit fees and review the
adequacy of the Corporation's internal accounting controls.
(c) A Compensation Committee, which shall determine compensation for
the Corporation's executive officers and shall administer all stock
incentive and other employee benefit plans adopted by the Corporation.
For purposes of this Section 3.11, "Independent Directors" shall mean directors
who are not (i) officers of the Corporation, (ii) employees of the Corporation,
(iii) holders of more than 5 percent of the outstanding Voting Stock of the
Corporation or (iv) with reference to any particular transaction, directly or
indirectly a party to such transaction within the meaning of Section 8.60 of the
BCA. The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of such committee. Any such committee, to the extent provided in
the resolution establishing such committee and not inconsistent with the BCA,
shall have and may exercise the powers of the Board of
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Directors in the management of the business and affairs of the Corporation.
Unless the Board of Directors shall require a greater number, the presence of
a majority of the total membership of any committee of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting of
such committee and the act of a majority of those present shall be necessary
and sufficient for the taking of any action thereat. Vacancies in the
membership of committees shall be filed by the Board of Directors at any
regular or special meeting of the Board of Directors. Each committee shall
keep regular minutes of its proceedings and report the same to the Board of
Directors when required.
ARTICLE IV
OFFICERS
SECTION 4.1 ELECTED OFFICERS. The elected officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers as the Board of Directors from
time to time may deem proper. The Chairman of the Board shall be chosen from
among the directors. All officers chosen by the Board of Directors shall each
have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article IV. Such officers shall also
have such powers and duties as from time to time may be conferred by the Board
of Directors. Any two or more offices may be held by the same person.
SECTION 4.2 ELECTION AND TERM OF OFFICE. The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such meeting
such election shall be held as soon thereafter as convenient. Subject to
Section 4.8 of these Bylaws, each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign.
SECTION 4.3 CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the shareholders and of the Board of Directors.
Except where by law the signature of the President is required, the Chairman of
the Board shall possess the same power as the President to sign all
certificates, contracts, and other instruments of the Corporation which may be
authorized by the Board of Directors. He shall make reports to the Board of
Directors and the shareholders, and shall perform all such other duties as are
properly required of him by the Board of Directors.
SECTION 4.4 PRESIDENT. The President shall be the chief executive
officer of the Corporation and shall be responsible for formulating general
policies and programs for the Corporation for
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submission to the Board of Directors and for carrying out the programs and
policies approved by the Board of Directors. Subject to the direction and
control of the Board of Directors, he shall be responsible for the
administration and operation of the business and affairs of the Corporation.
He shall cause to be called regular and special meetings of the shareholders
and the Board of Directors in accordance with these Bylaws and, in the
absence of or because of the inability or refusal to act of the Chairman of
the Board, shall preside at all such meetings. He shall have the power to
sign and deliver on behalf of the Corporation all certificates, contracts and
other instruments as authorized by the Board of Directors. The President
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
SECTION 4.5 VICE PRESIDENT. The Vice President (or in the event there
be more than one Vice President, each of the Vice Presidents) shall assist the
President in the discharge of his duties as the President may direct and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors. In the absence of the President or in
the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated by the Board of Directors, or by the President if the Board of
Directors has not made such a designation, or in the absence of any designation,
then in the order of seniority of tenure as Vice President) shall perform the
duties of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Except in those instances
in which the authority to execute is expressly delegated to another officer or
agent of the Corporation or a different mode of execution is expressly
prescribed by the Board of Directors or these Bylaws, the Vice President (or
each of them if there are more than one) may execute for the Corporation
certificates for its shares and any contracts, deeds, mortgages, bonds or other
instruments which the Board of Directors has authorized to be executed, and he
may accomplish such execution either under or without the seal of the
Corporation and either individually or with the Secretary, any assistant
secretary, or any other officer thereunto authorized by the Board of Directors,
according to the requirements of the form of the instrument.
SECTION 4.6 SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of shareholders and Directors and all other notices
required by law or by these Bylaws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman of the Board or the President, or by the Board of Directors,
upon whose request the meeting is called as provided in these Bylaws. He shall
record all the proceedings of the meetings of the Board of
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Directors, any committees thereof and the shareholders of the Corporation in
a book to be kept for that purpose, and shall perform such other duties as
may be assigned to him by the Board of Directors, the Chairman of the Board
or the President. He shall have the custody of the seal of the Corporation
and shall affix the same to all instruments requiring it, when authorized by
the Board of Directors, the Chairman of the Board or the President, and
attest to the same.
SECTION 4.7 TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. The Treasurer
shall deposit all moneys and other valuables in the name and to the credit of
the Corporation in such depositaries as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, the Chairman of the Board, or the President,
taking proper vouchers for such disbursements. The Treasurer shall render to
the Chairman of the Board, the President and the Board of Directors, whenever
requested, an account of all his transactions as Treasurer and of the financial
condition of the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond for the faithful discharge of his
duties in such amount and with such surety as the Board of Directors shall
prescribe.
SECTION 4.8 REMOVAL. Any officer elected by the Board of Directors may
be removed by a majority of the Board of Directors whenever, in their judgment,
the best interests of the Corporation would be served thereby. No elected
officer shall have any contractual rights against the Corporation for
compensation by virtue of such election beyond the date of the election of his
successor, his death, his resignation or his removal, whichever event shall
first occur, except as otherwise provided in an employment contract or under an
employee deferred compensation plan.
SECTION 4.9 VACANCIES. A newly created office and a vacancy in any
office because of death, resignation, disqualification, removal or otherwise may
be filled by the Board of Directors for the unexpired portion of the term.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.1 SHARES REPRESENTED BY CERTIFICATES AND UNCERTIFICATED
SHARES. Shares either shall be represented by certificates or shall be
uncertificated shares.
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Certificates representing shares of the Corporation shall be signed by the
appropriate officers and may be sealed with the seal or facsimile of the seal of
the Corporation. If a certificate is countersigned by a transfer agent or
registrar, other than the Corporation or its employee, any other signatures may
be facsimile. Each certificate representing shares shall be consecutively
numbered or otherwise identified, and shall also state the name of the person to
whom issued, the number and class of shares (with designation of series, if
any), the date of issue, and that the Corporation is organized under Illinois
law. If the Corporation is authorized to issue shares of more than one class or
of series within a class, the certificate shall also contain such information or
statement as may be required by law.
Unless prohibited by the Articles of Incorporation, the Board of Directors
may provide by resolution that some or all of any class or series of shares
shall be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until the certificate has been surrendered to the
Corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares, the Corporation shall send the registered owner thereof a
written notice of all information that would appear on a certificate. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of uncertificated shares shall be identical to those of the holders of
certificates representing shares of the same class and series.
The name and address of each shareholder, the number and class of shares
held and the date on which the shares were issued shall be entered in the books
of the Corporation. The person in whose name shares stand on the books of the
Corporation shall be deemed the owner thereof for all purposes as regards the
Corporation.
SECTION 5.2 LOST CERTIFICATES. If a certificate representing shares has
allegedly been lost or destroyed, the Board of Directors may in its discretion,
except as may be required by law, direct that a new certificate be issued upon
such indemnification and other reasonable requirements as it may impose.
SECTION 5.3 TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be recorded on the books of the Corporation. Transfer of shares
represented by a certificate, except in the case of lost or destroyed
certificate, shall be made on surrender for cancellation of the certificate for
such shares. A certificate presented for transfer must be duly endorsed and
accompanied by proper guaranty of signature and other appropriate assurances
that the endorsement is effective. Transfer of an uncertificated share shall be
made on receipt of the Corporation of an instrument from the registered owner or
other appropriate person. The instruction shall be in writing or a
communication in such form as may be agreed upon in writing by the Corporation.
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ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 FISCAL YEAR. The fiscal year of the Corporation shall be as
determined from time to time by the Board of Directors.
SECTION 6.2 DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Articles of
Incorporation.
SECTION 6.3 SEAL. The corporate seal may bear in the center of the
emblem of some object, and shall have inscribed thereunder the words "Corporate
Seal" and around the margin thereof the words "Ticketmaster Group, Inc. --
Illinois 1988".
SECTION 6.4 WAIVER OF NOTICE. Whenever any notice is required to be
given to any shareholder or director of the Corporation under the provisions of
these Bylaws, the Articles of Incorporation or the BCA, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at, nor the purpose of, any
annual or special meeting of the shareholders or the Board of Directors need be
specified in any waiver of notice of such meeting.
SECTION 6.5 AUDITS. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant selected by the Board of Directors, and it shall be
the duty of the Board of Directors to cause such audit to be made annually.
SECTION 6.6 RESIGNATIONS. Any director or any officer, whether elected
or appointed, may resign at any time by serving written notice of such
resignation on the Chairman of the Board, the President or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on
the date said notice is received by the Chairman of the Board, the President or
the Secretary, provided, that if such notice specifies a future date on which
such resignation shall become effective, then the resignation shall be effective
as of such future date. No action shall be required of the Board of Directors
or the shareholders to make any such resignation effective.
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ARTICLE VII
VOTING OF SECURITIES
SECTION 7.1 VOTING OF SECURITIES HELD BY THE CORPORATION. The
President, Secretary, Treasurer, Secretary, and any Vice President or Assistant
Secretary of the Corporation if there be any such officers, shall have full
authority, in the name and on behalf of the Corporation, to attend, act and vote
at any meeting of security holders of any corporation in which the Corporation
may hold securities, and at any such meeting shall possess and may exercise any
and all rights and powers incident to the ownership of such securities and
which, as the holder thereof, the Corporation might possess and exercise if
personally present, and may exercise such power and authority through the
execution of proxies or may delegate such power and authority to any other
officer, agent or employee of the Corporation.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 AMENDMENTS. These Bylaws may be amended, added to,
rescinded or repealed at any meeting of the Board of Directors or of the
shareholders, provided that notice of the proposed change was given (a) in the
case of a meeting of the shareholders, in the notice of the meeting delivered
pursuant to Section 2.4 of these Bylaws and (b) in the case of a meeting of the
Board of Directors, in a notice given no less than two days prior to the
meeting; PROVIDED, HOWEVER, that, in the case of amendments by shareholders,
notwithstanding any other provisions of these Bylaws or any provision of law
which might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the Voting
Stock required by law, the Articles of Incorporation, any Preferred Stock
Designation or these Bylaws, the affirmative vote of the holders of at least a
majority of the then outstanding Voting Stock, voting together as a single
class, shall be required to alter, amend or repeal any provision of these
Bylaws.
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR SECURITIES LAWS OF OTHER JURISDICTIONS AND
MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE ISSUER, SUCH DISPOSITION IS EXEMPT FROM SUCH REGISTRATION
REQUIREMENTS.
EXCHANGEABLE PROMISSORY NOTE
U.S. $5,000,000 June ___, 1996
Los Angeles, California
1. PRINCIPAL AMOUNT. For Value Received, the undersigned ("Maker"), does
hereby promise to pay to the order of Warner Music International Services
Limited ("Payee"), the principal sum of Five Million Dollars (U.S. $5,000,000)
upon the terms and conditions set forth herein.
2. INTEREST.
(a) Maker shall pay interest on the unpaid principal of this
promissory note (the "Note") from the date hereof until all amounts due
hereunder are paid in full at a fluctuating rate equal to the Prime Rate
(as defined below) in effect from time to time. Each change in such
interest rate shall take effect simultaneously with the corresponding
change in such Prime Rate. For the purposes of this Agreement, "Prime
Rate" shall mean the rate of interest announced by Wells Fargo Bank,
National Association from time to time as its "Prime Rate". Interest on
the Note shall be computed on the actual number of days elapsed and a 365
or 366 day year. Payments of interest on the unpaid principal hereof shall
be due and payable pursuant to Sections 3 or 4 hereof, as appropriate.
(b) It is the intention of Maker and Payee to conform to applicable
usury laws, if any. Accordingly, notwithstanding anything to the contrary
in this Note or any other agreement entered into in connection herewith, it
is agreed as follows: (i) the aggregate of all interest and any other
charges constituting interest under applicable law and contracted for,
chargeable, or receivable under this Note or otherwise in connection with
the obligation evidenced hereby shall under no circumstances exceed the
maximum amount of interest permitted by applicable law, if any, and any
excess shall be deemed a mistake and cancelled automatically and, if
theretofore paid, shall, at the option of Maker, be
<PAGE>
refunded to Maker or credited on the principal amount of this Note; and
(ii) in the event that the entire unpaid balance of this Note is declared
due and payable by Payee, then earned interest may never include more than
the maximum amount permitted by applicable law, if any, and any unearned
interest shall be cancelled automatically and, if theretofore paid, shall
at the option of Maker, either be refunded to Maker or credited, to the
extent permitted by law, on the principal amount of this Note.
3. POST MATURITY INTEREST. Any amount of principal and/or interest
hereon which is not paid when due, whether at stated maturity, by acceleration
or otherwise, shall bear interest from the date when due until said principal
and/or interest amount is paid in full, payable on demand, at the lesser of (a)
an interest rate equal to 2% per annum in excess of the interest rate set forth
in Section 2 hereof and (b) the highest rate of interest allowable under
applicable law.
4. PAYMENTS.
(a) PRINCIPAL AND INTEREST. Subject to Sections 5 and 8 hereof, the
outstanding principal amount of this Note, together with all accrued and unpaid
interest thereon shall be due and payable on June ___, 1997 (the "Maturity
Date").
(b) MAKING OF PAYMENTS. Payment of principal and interest in respect
of this Note shall be made by delivery of a certified or bank cashier's check or
of other immediately available funds (including electronic wire transfer to an
account designated in writing to Maker by Payee) and delivered to Payee on the
date or dates due at Payee's address as set forth in the Purchase Agreement (as
defined in Section 10 below) or at such other place as the holder hereof may
from time to time designate in writing. Whenever any payment on this Note shall
be stated to be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note. For
purposes of this Note, "Business Day" means each day other than a Saturday, a
Sunday or any other day on which banking institutions in the City of Los
Angeles, California are authorized or obligated by law or executive order to be
closed.
(c) TREATY COOPERATION. The Maker shall upon reasonable request by
the Payee co-operate in promptly pursuing an application to any relevant
taxation authorities pursuant to the UK/US Double Taxation Treaty for all
payments of interest made by the Maker under this Note to be paid without
deduction or withholding.
5. PREPAYMENT.
(a) VOLUNTARY PREPAYMENT. Maker, without premium or penalty, may
prepay this Note in whole or in part, with accrued interest to the date of such
prepayment on the amount prepaid upon two (2) Business Days prior written notice
to the Payee.
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(b) APPLICATION OF PREPAYMENT PROCEEDS. All proceeds of any
prepayments made pursuant to this Section 5 shall be applied first to the
payment of accrued but unpaid interest and next to the outstanding principal
balance of this Note.
6. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event of Default" under this Note;
(a) PRINCIPAL DEFAULT. Maker shall fail to pay the outstanding principal
amount due hereunder, or any portion thereof, when due;
(b) INTEREST DEFAULT. Maker shall fail to pay any interest which has
accrued hereon when due;
(c) COVENANT DEFAULT. Maker shall default in the observance or
performance of any material obligation under Section 8 of this Note and such
default shall remain uncured for a period of ten (10) days after receipt by
Maker of written notice of such default from Payee;
(d) GUARANTY. The Guaranty dated as of the date hereof (the "Guaranty")
made by Ticketmaster Group, Inc., the ultimate parent of Maker ("Parent"), in
favor of Payee shall for any reason become unenforceable in accordance with its
terms or the Parent shall for any reason and/or by any means seek to repudiate
the Guaranty;
(e) CHANGE OF CONTROL. If Parent ceases to "control" (as such term is
defined by the rules and regulations of the Securities Act), directly or
indirectly, Maker; and
(f) INSOLVENCY. Maker or Parent becomes insolvent or generally fails to
pay, or admits in writing its inability or refusal to pay, its debts as they
become due; or Maker's or Parent's application for, consent to or acquiescence
in, the appointment of a trustee in bankruptcy, receiver or other custodian for
Maker or Parent, as the case may be, or any of its property or assets, or
Maker's or Parent's making a general assignment for the benefit of its
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Maker or Parent, as the
case may be, or for a substantial part of his property or assets and such
appointment is not discharged within 60 days thereafter; or any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any liquidation proceeding is commenced in
respect of Maker or Parent, as the case may be, and, if such case or proceeding
is not commenced by Maker or Parent, as the case may be, it is either (i)
consented to or acquiesced in by Maker or Parent, as the case may be, or (ii)
remains undismissed for 60 days.
7. REMEDIES. Upon or at any time after the occurrence of an Event of
Default specified in Sections 6(a) through 6(e) hereof, the principal amount of
this Note and all accrued and unpaid interest thereon (and all other amounts due
with respect to this Note) shall, at the option of Payee, become immediately due
and payable without presentment, demand, protest,
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notice of acceleration, notice of intent to accelerate or other notice of any
kind, all of which are hereby expressly waived by Maker, anything in this Note
to the contrary notwithstanding. Upon the occurrence of an Event of Default
specified in Section 6(f) hereof, the principal amount of this Note and all
accrued and unpaid interest thereon (and all other amounts due with respect to
this Note) shall thereupon and concurrently therewith become due and payable.
The Maker and Parent, jointly and severally, and every endorser or guarantor
hereof agrees, subject only to any limitation imposed by law, to pay on demand
all expenses, including reasonable attorneys' fees, disbursements and legal
expenses, incurred by the holder of this Note in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by acceleration
or otherwise, in addition to any other remedy available in law or equity.
8. EXCHANGE RIGHTS.
(a) EXCHANGE PRIVILEGE. In the event that Parent successfully consummates
an initial public offering (the "IPO") of its common stock (the "Common Stock"),
subject to and upon compliance with the provisions of this Section 8, the holder
of this Note (the "Holder") shall have the right, at its option, prior to the
payment of all of the principal and interest then outstanding under this Note to
acquire from Maker the Stated Number of Shares (as defined below) on the closing
date of the IPO (the "IPO Closing Date"), in exchange for surrender of this Note
(in whole and not in part). The right to acquire the Stated Number of Shares
from Maker on the IPO Closing Date upon surrender of this Note is hereafter
referred to as the "Exchange Privilege." The "Stated Number of Shares" shall
mean that number of whole shares of Common Stock which is equal to the quotient
of (a) the outstanding principal amount of the Note on the IPO Closing Date and
(b) the "Price to Public" per share of Common Stock (the "IPO Price") as fixed
by Parent on the IPO Closing Date.
(b) IPO NOTICE. No less than seven (7) Business Days prior to the date
that Maker reasonably believes will be the IPO Closing Date, Maker shall provide
Payee with written notice (the "IPO Notice") of the fact that Parent will sell
Common Stock to the public in the IPO on the IPO Closing Date and the price
range per share of Common Stock to be sold in the IPO. In addition, Maker shall
give Payee notice of the commencement of the IPO "road show" and provide Payee
with a copy of Parent's preliminary prospectus (and any amendment or supplement
thereto) promptly following the filing of such preliminary prospectus with the
Securities and Exchange Commission.
(c) EXCHANGE ELECTION. In order to properly exercise the Exchange
Privilege, the Holder shall (i) within three (3) Business Days of receipt of the
IPO Notice deliver a written notice (personally, by overnight courier or by
facsimile) to Maker stating that the Holder intends to exercise the Exchange
Privilege (the "Exchange Notice") and (ii) on the IPO Closing Date, surrender
this Note to Maker for cancellation at an office maintained by Maker or such
other place as may be mutually agreed upon by Maker and the Holder.
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(d) DELIVERY OF SHARES. As promptly as practicable after the IPO Closing
Date, Maker shall deliver at such office to the Holder, or on its written order,
a certificate for the Stated Number of Shares (the "Certificate") issuable upon
exercise of the Exchange Privilege in accordance with the provisions of this
Section 8. Exchange shall be deemed to have been effected on the date of the
IPO Closing Date, and the Holder shall be deemed to have become on said date the
holder of record of the Stated Number of Shares. No fractional shares or
securities representing fractional shares of Common Stock shall be issued upon
the exercise of the Exchange Privilege. Any fractional interest in a share of
Common Stock resulting from the exercise of the Exchange Privilege shall be paid
upon surrender of this Note in cash (computed to the nearest cent) based on the
IPO Price.
(e) CASH PAYMENT OF ACCRUED INTEREST. In the event that the Holder has
properly exercised the Exchange Privilege, the Holder shall be entitled to
receive a cash payment equal to the amount of interest accrued (but unpaid) on
the Note through the IPO Closing Date. Such payment shall be made in
immediately available funds by Parent to Payee and delivered to the Holder
within two (2) business days following the IPO Closing Date.
(f) SATISFACTION OF NOTE OBLIGATIONS. Upon delivery to the Holder of the
Certificate and payment of the accrued interest described in Section 8(e) above,
all of Maker's obligations under the Note shall be fully satisfied and
discharged.
(g) VALID ISSUANCE, ETC.. All shares of Common Stock to be issued upon
the proper exercise of the Exchange Privilege shall be validly issued, fully
paid and nonassessable.
(h) REVOCATION OF EXCHANGE NOTICE. In the event that (i) the IPO Price is
below the price range set forth in the IPO Notice, (ii) the IPO is not fully
subscribed on the IPO Closing Date and/or (iii) the IPO Closing Date does not
occur on or prior to the Maturity Date, Payee may upon written notice to Maker
withdraw the Exchange Notice, which withdrawal shall be irrevocable. In the
event that Payee properly withdraws the Exchange Notice pursuant to this Section
8(h), Maker shall make payments to Payee on the Note in accordance with its
terms without regard to Section 8 hereof.
9. WAIVERS. No delay or omission on the part of holder in exercising any
right hereunder shall operate as a waiver of any such right, and the waiver of
any such right on any one occasion shall not be construed as a bar to or waiver
of any such right on any future occasion.
10. TRANSFER OF NOTE. This Note may not be transferred or assigned other
than together with the Sale and Purchase Agreement dated as of the date hereof
(the "Purchase Agreement") between Maker and Payee; PROVIDED, HOWEVER, that
Payee may at any time upon prior written notice to, but without the prior
consent of, Maker and/or Guarantor assign this Note to any affiliate of Payee
which is controlled, directly or indirectly, by Time Warner Inc. In addition,
until notified by Payee in writing of the transfer of this Note, Maker shall be
entitled to deem
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Payee or such person who has been so identified by Payee in writing to Maker as
the owner and holder of this Note.
11. PURCHASE AGREEMENT. This Note is made pursuant to the terms of the
Purchase Agreement.
12. NOTICES. All notices, offers or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be considered as properly given or
made on the earliest to occur of (i) personal delivery, (ii) the next Business
Day after being delivered to a nationally recognized overnight mail delivery or
courier service, (iii) three (3) days after being mailed by certified mail,
return receipt requested, postage prepaid, or (iv) by prepaid telegram or
facsimile transmission (with written confirmation of receipt). All notices
given or made pursuant hereto shall be addressed to Payee as provided in the
Purchase Agreement and to Maker and/or Parent at Maker's address appearing on
the signature page hereof under the heading "MAKER". The address of any party
hereto may be changed by a notice in writing given in accordance with the
provisions hereof.
13. GOVERNING LAW. This Note shall be governed and construed and the
rights and liabilities of the parties hereto shall be determined in accordance
with the internal laws of the State of Delaware without regard to the conflict
of laws principles thereof.
14. SETOFF. In the event that Time Warner Inc. or any of its affiliates
("Time Warner") owe money to Maker or Ticketmaster UK Limited ("TM UK") arising
out of or relating to the transactions contemplated by the Purchase Agreement
and/or Payee's ownership of shares in TM UK (the "Setoff Amount"), Payee may,
upon the earlier of the Maturity Date and the date on which the Holder delivers
the Exchange Notice, upon no less than ten (10) Business Days' prior written
notice to Maker, request that Maker setoff any such amounts due and owing to
Maker, TM UK or Parent by Time Warner against the outstanding principal
(together with accrued but unpaid interest thereon) balance under this Note.
Upon receipt of such request by Maker, the outstanding principal amount of this
Note (together with accrued but unpaid interest thereon) shall be deemed to be
reduced dollar for dollar by the Setoff Amount.
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IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
day and year first above written.
MAKER:
TM OVERSEAS, INC.
By:
---------------------------------------------
Print Name:
--------------------------------
Title:
---------------------------------------
ADDRESS:
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: Fredric D. Rosen
Ned S. Goldstein
With a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60606
Attention: Charles Evans Gerber
[SIGNATURE PAGE TO EXCHANGEABLE PROMISSORY NOTE]
C:\84441\7263.004\0010.K
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CREDIT AGREEMENT
dated as of November 18, 1994
by and among
TICKETMASTER GROUP, INC.,
THE LENDERS NAMED HEREIN
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I.
DEFINITIONS
SECTION 1.1. "ACQUISITION(S)"................................... 1
SECTION 1.2. "ADJUSTED LEVERAGE RATIO".......................... 2
SECTION 1.3. "ADVERSELY DETERMINED"............................. 2
SECTION 1.4. "APPLICABLE MARGIN"................................ 2
SECTION 1.5. "ASSET SALE"....................................... 3
SECTION 1.6. "ASSIGNMENT AGREEMENT"............................. 3
SECTION 1.7. "BASE RATE"........................................ 3
SECTION 1.8. "BASE RATE BORROWING".............................. 3
SECTION 1.9. "BORROWER PLEDGE AGREEMENT"........................ 4
SECTION 1.10. "BORROWING"........................................ 4
SECTION 1.11. "BUSINESS DAY"..................................... 4
SECTION 1.12. "CAPITAL EXPENDITURES"............................. 4
SECTION 1.13. "CASH"............................................. 4
SECTION 1.14. "CASH EQUIVALENTS"................................. 4
SECTION 1.15. "CASH FLOW"........................................ 5
SECTION 1.16. "CHANGE OF CONTROL"................................ 5
SECTION 1.17. "CLIENT ACCOUNTS".................................. 5
SECTION 1.18. "CLOSING DATE"..................................... 5
SECTION 1.19. "COLLATERAL"....................................... 5
SECTION 1.20. "COLLATERAL DOCUMENTS"............................. 5
SECTION 1.21. "COMMITMENTS"...................................... 5
SECTION 1.22. "COMPLIANCE CERTIFICATE"........................... 6
SECTION 1.23. "CONTINGENT OBLIGATIONS"........................... 6
SECTION 1.24. "DEBT"............................................. 6
SECTION 1.25. "DEFINED DEFAULT".................................. 6
SECTION 1.26. "EARNINGS"......................................... 7
SECTION 1.27. "EBITDA"........................................... 7
SECTION 1.28. "ELIGIBLE ASSIGNEE(S)"............................. 7
SECTION 1.29. "ERISA"............................................ 7
SECTION 1.30. "EVENT OF DEFAULT"................................. 7
SECTION 1.31. "EXISTING LETTERS OF CREDIT"....................... 7
SECTION 1.32. "FEDERAL FUNDS RATE"............................... 8
SECTION 1.33. "FEDERAL RESERVE BOARD"............................ 8
SECTION 1.34. "FEES"............................................. 8
SECTION 1.35. "FISCAL YEAR"...................................... 8
SECTION 1.36. "GAAP"............................................. 8
SECTION 1.37. "GOVERNMENTAL APPROVAL"............................ 8
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SECTION 1.38. "GOVERNMENTAL AUTHORITY"........................... 8
SECTION 1.39. "GUARANTIES"....................................... 9
SECTION 1.40. "GUARANTOR(S)"..................................... 9
SECTION 1.41. "GUARANTOR PLEDGE AGREEMENTS"...................... 9
SECTION 1.42. "GUARANTY"......................................... 9
SECTION 1.43. "HIGHEST LAWFUL RATE".............................. 9
SECTION 1.44. "ILLEGALITY"....................................... 9
SECTION 1.45. "INDEPENDENT ACCOUNTANTS".......................... 9
SECTION 1.46. "INTEREST PERIOD".................................. 9
SECTION 1.47. "INTEREST RATE AGREEMENT".......................... 10
SECTION 1.48. "IPO PROCEEDS"..................................... 10
SECTION 1.49. "ISSUING LENDER"................................... 10
SECTION 1.50. "LETTER OF CREDIT USAGE"........................... 10
SECTION 1.51. "LETTERS OF CREDIT"................................ 10
SECTION 1.52. "LIBOR"............................................ 10
SECTION 1.53. "LIBOR BORROWING".................................. 10
SECTION 1.54. "LIEN"............................................. 10
SECTION 1.55. "LOAN ACCOUNT"..................................... 11
SECTION 1.56. "LOAN DOCUMENTS"................................... 11
SECTION 1.57. "LOANS"............................................ 11
SECTION 1.58. "MAKE-WELL AGREEMENT".............................. 11
SECTION 1.59. "MATERIAL ADVERSE EFFECT".......................... 11
SECTION 1.60. "MATURITY DATE".................................... 11
SECTION 1.61. "MAXIMUM LEVERAGE RATIO"........................... 11
SECTION 1.62. "NON-FUNDING LENDER"............................... 11
SECTION 1.63. "NON-RECOURSE DEBT"................................ 11
SECTION 1.64. "NON-U.S. LENDER".................................. 11
SECTION 1.65. "NOTES"............................................ 11
SECTION 1.66. "OBLIGATIONS"...................................... 12
SECTION 1.67. "OPTIONAL ADDITIONAL ADVANCE"...................... 12
SECTION 1.68. "PARTNERSHIP(S)"................................... 12
SECTION 1.69. "PAYMENT ACCOUNT".................................. 12
SECTION 1.70. "PERMITTED BONDS".................................. 12
SECTION 1.71. "PERSON(S)"........................................ 12
SECTION 1.72. "PLEDGE AGREEMENTS"................................ 12
SECTION 1.73. "POTENTIAL EVENT OF DEFAULT"....................... 13
SECTION 1.74. "PRIME RATE"....................................... 13
SECTION 1.75. "PRO RATA SHARE"................................... 13
SECTION 1.76. "PROXIMATE CONTINGENT OBLIGATIONS"................. 13
SECTION 1.77. "REGISTER"......................................... 13
SECTION 1.78. "REGULATION D"..................................... 13
SECTION 1.79. "REGULATORY CHANGE"................................ 13
SECTION 1.80. "REQUIRED LENDERS"................................. 13
ii
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SECTION 1.81. "RESIDUAL OBLIGATIONS"............................. 14
SECTION 1.82. "RESPONSIBLE OFFICER".............................. 14
SECTION 1.83. "RESTRICTED ENTITY"................................ 14
SECTION 1.84. "RESTRICTED SUBSIDIARY"............................ 14
SECTION 1.85. "REVOLVING LOAN COMMITMENT" and "REVOLVING LOAN
COMMITMENTS"..................................... 15
SECTION 1.86. "REVOLVING LOANS".................................. 15
SECTION 1.87. "SIGNIFICANT RESTRICTED ENTITY".................... 15
SECTION 1.88. "SUBSIDIARY"....................................... 15
SECTION 1.89. "SWING LINE LENDER"................................ 15
SECTION 1.90. "SWING LINE LOAN COMMITMENT"....................... 15
SECTION 1.91. "SWING LINE LOANS"................................. 15
SECTION 1.92. "TAXES"............................................ 15
SECTION 1.93. "TERM LOAN"........................................ 15
SECTION 1.94. "TERM LOAN COLLATERAL"............................. 15
SECTION 1.95. "TERM LOAN COMMITMENT"............................. 15
SECTION 1.96. "THIRD PARTY PLEDGE AGREEMENT"..................... 15
SECTION 1.97. "THIRD PARTY PLEDGOR".............................. 16
SECTION 1.98. "TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS".. 16
SECTION 1.99. "TRADEMARK MORTGAGE AND ASSIGNMENT AGREEMENT"...... 16
SECTION 2.00. "UNIFORM COMMERCIAL CODE".......................... 16
SECTION 2.01. "UNRESTRICTED ENTITY".............................. 16
SECTION 2.02. CONSTRUCTION IN GENERAL............................ 16
SECTION 2.03. EXHIBITS AND SCHEDULES............................. 16
SECTION 2.04. OTHER DEFINITIONS.................................. 17
ARTICLE II.
THE CREDITS
SECTION 2.1. REVOLVING LOAN COMMITMENTS......................... 17
SECTION 2.2. TERM LOAN COMMITMENTS.............................. 22
SECTION 2.3. NOTICE OF BORROWING................................ 23
SECTION 2.4. CALCULATION AND PAYMENTS OF INTEREST............... 25
SECTION 2.5. CALCULATION AND PAYMENT OF FEES.................... 29
SECTION 2.6. PAYMENT OF PRINCIPAL, INTEREST AND FEES; INTEREST
ON OVERDUE PAYMENTS.............................. 30
SECTION 2.7. CANCELLATION OR REDUCTION OF REVOLVING LOAN
COMMITMENTS...................................... 32
SECTION 2.8. OPTIONAL AND MANDATORY PREPAYMENTS................. 32
SECTION 2.9. CAPITAL COSTS...................................... 34
SECTION 2.10. TAXES.............................................. 34
SECTION 2.11. DETERMINATIONS; CALCULATION........................ 37
SECTION 2.12. LOAN ACCOUNTS AND REGISTER; PRO RATA TREATMENT..... 37
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SECTION 2.13. FUNDING SOURCES.................................... 38
SECTION 2.14. SURVIVAL........................................... 38
SECTION 2.15. COLLATERAL......................................... 38
SECTION 2.16. GUARANTIES......................................... 39
ARTICLE III.
CONDITIONS TO LOANS
SECTION 3.1. CONDITIONS PRECEDENT TO LOANS ON CLOSING DATE...... 39
SECTION 3.2. CONDITIONS PRECEDENT TO LOANS ON SUBSEQUENT
FUNDING DATES.................................... 43
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. LEGAL STATUS: BORROWER AND RESTRICTED
SUBSIDIARIES..................................... 44
SECTION 4.2. ORGANIZATION AND QUALIFICATION OF OTHER RESTRICTED
ENTITIES......................................... 44
SECTION 4.3. AUTHORIZATION AND VALIDITY......................... 45
SECTION 4.4. NO VIOLATION: BORROWER............................. 45
SECTION 4.5. NO VIOLATION: GUARANTORS........................... 45
SECTION 4.6. CORRECTNESS OF FINANCIAL STATEMENTS................ 45
SECTION 4.7. INCOME TAX RETURNS................................. 46
SECTION 4.8. NO SUBORDINATION................................... 46
SECTION 4.9. PERMITS, FRANCHISES................................ 46
SECTION 4.10. ERISA.............................................. 46
SECTION 4.11. OTHER OBLIGATIONS.................................. 47
SECTION 4.12. REGULATION U....................................... 47
SECTION 4.13. ENVIRONMENTAL MATTERS.............................. 47
SECTION 4.14. CONSENTS........................................... 47
SECTION 4.15. LITIGATION......................................... 47
SECTION 4.16. TITLE TO PROPERTY; LIENS........................... 48
SECTION 4.17. DISCLOSURE......................................... 48
SECTION 4.18. FISCAL YEAR........................................ 48
SECTION 4.19. EMPLOYEE MATTERS................................... 48
SECTION 4.20. UNRESTRICTED ENTITIES.............................. 48
ARTICLE V.
AFFIRMATIVE COVENANTS
SECTION 5.1. PUNCTUAL PAYMENTS.................................. 49
SECTION 5.2. ACCOUNTING RECORDS................................. 49
SECTION 5.3. FINANCIAL STATEMENTS............................... 49
SECTION 5.4. EXISTENCE; COMPLIANCE WITH LAW..................... 51
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SECTION 5.5. INSURANCE.......................................... 51
SECTION 5.6. MAINTENANCE OF PROPERTIES.......................... 52
SECTION 5.7. TAXES AND OTHER LIABILITIES........................ 52
SECTION 5.8. LITIGATION......................................... 52
SECTION 5.9. FINANCIAL CONDITION................................ 52
SECTION 5.10. NOTICE TO AGENT.................................... 53
SECTION 5.11. INTEREST RATE HEDGE................................ 54
SECTION 5.12. REVISIONS OR UPDATES TO SCHEDULES.................. 54
SECTION 5.13. FURTHER ASSURANCES................................. 54
SECTION 5.14. COMPLIANCE WITH ERISA.............................. 55
SECTION 5.15. ENVIRONMENTAL PROTECTION STATUTES; OTHER
REGULATIONS...................................... 55
SECTION 5.16. NOTICE OF CHANGE IN MANAGEMENT..................... 55
SECTION 5.17. PAYMENT ACCOUNT.................................... 55
SECTION 5.18. CONVERSION OF UNRESTRICTED ENTITY TO RESTRICTED
ENTITY........................................... 55
ARTICLE VI.
NEGATIVE COVENANTS
SECTION 6.1. USE OF FUNDS....................................... 56
SECTION 6.2. CAPITAL EXPENDITURES............................... 56
SECTION 6.3. SALE-LEASEBACK..................................... 56
SECTION 6.4. OTHER INDEBTEDNESS................................. 56
SECTION 6.5. LIENS.............................................. 57
SECTION 6.6. MERGER, CONSOLIDATION, TRANSFER OF ASSETS.......... 57
SECTION 6.7. GUARANTIES......................................... 58
SECTION 6.8. LOANS, ADVANCES, INVESTMENTS....................... 58
SECTION 6.9. DIVIDENDS, DISTRIBUTIONS........................... 59
SECTION 6.10. PARTNERSHIPS....................................... 59
SECTION 6.11. TRANSACTIONS WITH AFFILIATES....................... 59
SECTION 6.12. ACQUISITIONS....................................... 59
SECTION 6.13. PREPAYMENT OF INDEBTEDNESS......................... 60
SECTION 6.14. SPECULATIVE TRANSACTIONS........................... 61
SECTION 6.15. UNRESTRICTED ENTITIES.............................. 61
ARTICLE VII.
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT.................................. 62
SECTION 7.2. REMEDIES........................................... 66
SECTION 7.3. APPLICATION OF PROCEEDS AFTER EVENT OF DEFAULT AND
ACCELERATION..................................... 67
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ARTICLE VIII.
AGENT AND THE LENDERS
SECTION 8.1. AUTHORIZATION AND ACTION........................... 67
SECTION 8.2. EXCULPATION; AGENT'S RELIANCE; ETC................. 69
SECTION 8.3. WELLS FARGO AND AFFILIATES......................... 69
SECTION 8.4. LENDER CREDIT DECISION............................. 70
SECTION 8.5. INDEMNIFICATION.................................... 70
SECTION 8.6. SUCCESSOR AGENT.................................... 70
SECTION 8.7. EXCESS PAYMENTS.................................... 71
SECTION 8.8. BENEFICIARIES...................................... 71
SECTION 8.9. OBLIGATIONS SEVERAL................................ 71
SECTION 8.10. NO OBLIGATION OF ISSUING LENDER TO OTHER LENDERS
WITH RESPECT TO LETTERS OF CREDIT................ 72
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. NO WAIVER; MODIFICATIONS IN WRITING................ 72
SECTION 9.2. NOTICES............................................ 73
SECTION 9.3. COSTS, EXPENSES AND ATTORNEYS' FEES................ 74
SECTION 9.4. INDEMNITY.......................................... 75
SECTION 9.5. SUCCESSORS AND ASSIGNMENT AND PARTICIPATIONS....... 76
SECTION 9.6. SET-OFF............................................ 78
SECTION 9.7. EFFECTIVENESS...................................... 78
SECTION 9.8. HEADINGS........................................... 78
SECTION 9.9. EXECUTION IN COUNTERPARTS.......................... 78
SECTION 9.10. COMPLETE AGREEMENT................................. 79
SECTION 9.11. INTERPRETATION..................................... 79
SECTION 9.12. NO COURSE OF CONDUCT............................... 79
SECTION 9.13. NO THIRD PARTIES BENEFITED......................... 79
SECTION 9.14. LIEN ON DEPOSITS AND PROPERTY IN POSSESSION OF ANY
LENDER........................................... 79
SECTION 9.15. NONLIABILITY OF THE LENDERS........................ 80
SECTION 9.16. TIME............................................... 81
SECTION 9.17. SEVERABILITY OF PROVISIONS; INDEPENDENCE OF
COVENANTS........................................ 81
SECTION 9.18. GOVERNING LAW...................................... 81
SECTION 9.19. JURISDICTION AND VENUE............................. 81
SECTION 9.20. WAIVER OF TRIAL BY JURY............................ 82
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SCHEDULES
A Lenders
1.31 Existing Letters of Credit
2.01 Unrestricted Entities
2.1(a) Debt Repaid on Closing Date
4.1 Subsidiaries
4.2 Restricted Entities in Partnership/Joint Venture Form
4.7 Tax Sharing Agreements
4.15 Litigation
6.5 Rights of First Refusal and Similar Encumbrances
6.9 Certain Employment Agreements, Incentive Plans and Stock
Option Agreements
6.12 Acquisition Candidate Debt
EXHIBITS
1.9 Borrower Pledge Agreement
1.41 Guarantor Pledge Agreement
1.42 Guaranty
1.65A Revolving Loan Note
1.65B Term Loan Note
1.96 Third Party Pledge Agreement
2.1(c) Letter of Credit Agreement
2.3 Notice of Borrowing
2.4 Request for Conversion/Continuation
3.1(a) Automatic Debit Order from Borrower
3.1(c)(i) Opinion of Neal Gerber & Eisenberg
3.1(c)(ii)Opinion of Foster, Pepper & Shefelman
3.1(e) Corporate Officer's Certificate
5.3(b) Form of Compliance Certificate
9.2 Notice Addresses of Lenders Other Than Wells Fargo
9.5 Assignment Agreement
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CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of the 18th day of November,
1994, by and among TICKETMASTER GROUP, INC., an Illinois corporation
("Borrower"), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association ("Wells Fargo"), and the other financial institutions which are or
hereafter become signatories hereto and which are identified on SCHEDULE A
hereto, as amended from time to time (each a "Lender" and, collectively, the
"Lenders"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as agent for the Lenders ("Agent").
RECITALS
A. Ticketmaster Corporation, an Illinois corporation and a
subsidiary of Borrower, certain financial institutions, including, without
limitation, Wells Fargo (the "Existing Lenders") and Wells Fargo, as agent, are
parties to that certain Second Amended and Restated Credit Agreement dated as of
October 26, 1993, as amended by the First Amendment to Second Amended and
Restated Credit Agreement dated as of February 8, 1994 (the "Existing Credit
Agreement").
B. Pursuant to the Existing Credit Agreement, the Existing Lenders
made available to Ticketmaster Corporation certain revolving and term loan
credit facilities, the aggregate outstanding principal balance of which on the
date hereof is $40,625,000 (the "Existing Loans") and Wells Fargo issued certain
standby letters of credit, $675,968 in face amount of which are outstanding on
the date hereof (the "Existing Letters of Credit").
C. Borrower has requested that Wells Fargo and the other Lenders
provide Borrower with financing and Wells Fargo and the other Lenders have
agreed to provide such financing, subject to the terms and conditions set forth
below.
NOW, THEREFORE, in consideration of the Recitals set forth above,
which by this reference are incorporated into the Agreement set forth below, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Lenders, Agent and Borrower hereby agree to the
following:
AGREEMENT
ARTICLE I.
DEFINITIONS
As used herein, the following terms shall have the following meanings:
SECTION 1.1. "ACQUISITION(S)" means an investment in, or the
acquisition of the stock, assets or business by merger, consolidation or
otherwise of a Person other than an Unrestricted Entity (the "Acquisition
Candidate") by, Borrower or a Restricted Entity.
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SECTION 1.2. "ADJUSTED LEVERAGE RATIO" means, as of the end of each
fiscal quarter of each Fiscal Year, the ratio of (a) (i) EBITDA of Borrower and
Restricted Entities, PLUS (ii) cash dividends received by Borrower and any
Restricted Entity and cash dividends declared for the benefit of, and at that
time payable to, but not yet received by, Borrower or any Restricted Entity
provided that the payment of such dividend is not restricted in any way by law,
contract or otherwise MINUS (iii) distributions made by Borrower or any
Restricted Entity to minority shareholders MINUS (iv) EBITDA generated by any
assets or operations sold by Borrower or any Restricted Entity during such
period ("CASH FLOW") up to and including the date of sale to (b) all Debt for
borrowed money and reimbursement obligations for letters of credit of Borrower
and its Restricted Entities other than the Term Loans to the extent the Term
Loans are secured as required by Section 2.15(b) (all as shown on the financial
statements of Borrower and Restricted Entities required to be delivered pursuant
to Section 5.3(b) hereof).
SECTION 1.3. "ADVERSELY DETERMINED" means, with respect to any cause
of action or litigation or investigation by a Governmental Authority, a final
determination of liability or culpability on the part of the defendant (or
cross-defendant) or the agreement by the defendant (or cross-defendant) to
settle such litigation or investigation, which, in any case, requires (i) the
payment of the maximum amount reasonably likely to be assessed, imposed or
required for settlement or (ii) the imposition of the most disadvantageous
alternative remedy or sanction reasonably likely to be imposed or required for
settlement as measured against in the case of either clause (i) or clause (ii)
the maximum amount sought or which could be possible under any circumstances.
SECTION 1.4. "APPLICABLE MARGIN" means, except as set forth below,
during each fiscal quarter of each Fiscal Year, a percentage per annum as shown
below determined by reference to the Adjusted Leverage Ratio:
(i) with respect to the Base Rate:
Applicable
Adjusted Leverage Ratio Base Margin
less than 2.5 0.00%
2.50 or more but less than 3.25 0.00%
3.25 or more but less than 3.75 0.125%
3.75 or more but less than 4.5 0.625%
4.50 or more but less than 5.0 0.875%
5.0 and above 1.125%
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(ii) with respect to LIBOR:
Applicable
Adjusted Leverage Ratio Libor Margin
less than 2.5 0.75%
2.50 or more but less than 3.25 1.00%
3.25 or more but less than 3.75 1.375%
3.75 or more but less than 4.5 1.875%
4.50 or more but less than 5.0 2.125%
5.0 and above 2.375%
The Applicable Margin for any fiscal quarter shall be determined with reference
to the Adjusted Leverage Ratio calculation based on the quarterly financial
statements of Borrower and Restricted Entities most recently delivered to Agent
pursuant to Section 3.1(d) or 5.3(b) or, if Borrower, has failed to provide such
certificate within the period set forth therein, the Applicable Margin shall be
1.125% with respect to the Base Rate and 2.375% with respect to LIBOR until such
time as such financial statements are so delivered; provided that the Applicable
Margin in effect on the first day of the Interest Period (or, in the case of any
Interest Period commencing after such financial statements are due but not
delivered, on such date as such delayed financial statements are finally
delivered) shall remain in effect throughout such Interest Period
notwithstanding any change in the Adjusted Leverage Ratio that occurs prior to
the end of such Interest Period. Notwithstanding the foregoing, from the
Closing Date until December 15, 1994, the Applicable Margin for Base Rate Loans
shall be .625% and the Applicable Margin for LIBOR Loans shall be 1.875%.
SECTION 1.5. "ASSET SALE" means any sale or disposition or series of
sales or dispositions by Borrower or any Restricted Entity to any Person other
than Borrower or any of its Restricted Entities of (i) any stock of, or other
equity interest in, any Subsidiary or any interest in any Partnership,
(ii) substantially all of the assets of any division or line of business of
Borrower or any Restricted Entity, or (iii) any other assets (whether tangible
or intangible) of the Borrower or any Restricted Entity, outside of the ordinary
course of business.
SECTION 1.6. "ASSIGNMENT AGREEMENT" has the meaning set forth in
Section 9.5(b).
SECTION 1.7. "BASE RATE" means the higher of (a) the Prime Rate in
effect on any date of determination and (b) the Federal Funds Rate in effect on
such date as announced by the Federal Reserve Bank of New York plus one-half
percent (1/2%), plus, in either case, the Applicable Margin.
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SECTION 1.8. "BASE RATE BORROWING" means any Borrowing hereunder, or
portion thereof, which accrues interest at the Base Rate plus the Applicable
Margin.
SECTION 1.9. "BORROWER PLEDGE AGREEMENT" means that certain Pledge
Agreement of even date herewith made by Borrower in favor of Agent on behalf of
the Lenders, substantially in the form attached hereto as EXHIBIT 1.9.
SECTION 1.10. "BORROWING" means the aggregation of Loans made to
Borrower at the same time by the Lenders pursuant to Section 2.1 or 2.2, all of
which Loans are of the same type, i.e. Base Rate Loans or LIBOR Loans, and, in
the case of LIBOR Loans, have the same Interest Period.
SECTION 1.11. "BUSINESS DAY" means a day when commercial banks are
open for business in San Francisco, California, excluding Saturday and Sunday
and any day specified as a holiday by federal or California statute or
regulation; provided that with respect to LIBOR Borrowings "Business Day" shall
also not include any day that is not a day for trading among banks in the
Eurodollar inter-bank market.
SECTION 1.12. "CAPITAL EXPENDITURES" means, when used in connection
with any Person, for any period, the aggregate of all expenditures (including,
only in the year of acquisition, the principal component of capitalized lease
obligations of such Person incurred in connection with such acquisition) that,
in conformity with GAAP are required to be capitalized and reflected in the
property, plant and equipment or similar fixed asset accounts in the balance
sheet of such Person (including, without limitation, equipment the acquisition
of which is required to be capitalized and reflected in the property, plant and
equipment or similar fixed asset accounts in the balance sheet of such Person in
conformity with GAAP and which is purchased simultaneously with the trade-in of
existing equipment owned by such Person to the extent of (a) the gross amount of
such purchase price LESS (b) the value realized on the equipment being traded
in at such time) or are otherwise required to be capitalized in conformity with
GAAP.
SECTION 1.13. "CASH" means money, currency or a credit balance in a
demand, time, savings, passbook or like account with a bank, savings and loan
association, credit union or like organization, other than an account evidenced
by a negotiable certificate of deposit.
SECTION 1.14. "CASH EQUIVALENTS" means, as at any date of
determination, (i) marketable securities (a) issued or directly and
unconditionally guaranteed as to interest and principal by the United States
Government or (b) issued by any agency of the United States the obligations of
which are backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (ii) marketable direct obligations
issued by any state of the United States of America or any political subdivision
of any such state or any public instrumentality thereof, in each case maturing
within one year after such date and having, at the time of the acquisition
thereof, the highest rating obtainable from either Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("MOODY'S"); (iii) commercial paper
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maturing no more than one year from the date of creation thereof and having, at
the time of the acquisition thereof, a rating of at least A-1 from S&P or at
least P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances
maturing within one year after such date and issued or accepted by any Lender or
by any commercial bank organized under the laws of the United States of America
or any state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary Federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $100,000,000; and (v) shares of any money market mutual fund
that (a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's.
SECTION 1.15. "CASH FLOW" has the meaning set forth in Section 1.2.
SECTION 1.16. "CHANGE OF CONTROL" means (i) the consummation of any
consolidation or merger of Borrower in which Borrower is not the continuing or
surviving corporation or pursuant to which the common stock of Borrower would be
converted into cash, securities or other property, other than a merger of
Borrower in which the holders of the common stock immediately prior to the
merger, in the aggregate, have not less than fifty-one percent (51%) of the
common stock of the surviving corporation immediately after such merger; or
(ii) the issuance by Borrower of any of its securities to any Person or group of
Persons (other than the issuance pursuant to an offering to the general public)
if, after the issuance of such securities, the holders of Borrower's securities
having the right to vote for the election of directors immediately prior to such
issuance, in the aggregate, would own less than fifty-one percent (51%) of the
then issued and outstanding securities of Borrower entitled to vote for the
election of directors.
SECTION 1.17. "CLIENT ACCOUNTS" means amounts held by Borrower, any
Restricted Entity or any Unrestricted Entity for the account of vendors of
tickets and merchandise.
SECTION 1.18. "CLOSING DATE" means the date the first Loan hereunder
is made to Borrower by the Lenders.
SECTION 1.19. "COLLATERAL" means all property securing any or all of
the Obligations (other than Residual Obligations), as described in Sections 2.15
and 5.13 hereof and in the Pledge Agreements and the Trademark Mortgage and
Assignment Agreement.
SECTION 1.20. "COLLATERAL DOCUMENTS" means all present and future
security agreements (including, without limitation, the Pledge Agreements and
the Trademark Mortgage and Assignment Agreement) financing statements, and other
documents granting Liens to Agent on behalf of the Lenders, or perfecting,
effecting, facilitating, consenting to, providing notice of or otherwise
evidencing such Liens.
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SECTION 1.21. "COMMITMENTS" means the Term Loan Commitments and the
Revolving Loan Commitments in the aggregate principal amount of ONE HUNDRED
SEVENTY FIVE MILLION DOLLARS ($175,000,000).
SECTION 1.22. "COMPLIANCE CERTIFICATE" shall have the meaning set
forth in Section 5.3(b).
SECTION 1.23. "CONTINGENT OBLIGATIONS" means, as to any Person,
(A) any obligation of such Person guaranteeing or intended to guarantee any
Debt, leases (other than guarantees of operating lease obligations, which
guarantees are entered into in the ordinary course of business consistent with
past practice), dividends or other obligations ("PRIMARY OBLIGATIONS") of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor (any
agreement described in this clause (ii)(y) is hereinafter referred to as a
"Make-Well Agreement"), (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation
or (iv) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term
Contingent Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business or transactions permitted by
Section 6.11; and (B) any obligations of such Person under any Interest Rate
Agreement. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation, or
portion thereof, in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
SECTION 1.24. "DEBT" means, at any date, the aggregate amount of,
without duplication: (a) all obligations of a Person for borrowed money
(excluding such obligations between members of such Person's consolidated group
determined for financial reporting purposes); (b) all obligations of a Person
evidenced by bonds, debentures, notes or other similar instruments; (c) all
obligations of a Person to pay the deferred purchase price of property or
services, except under covenants not to compete or under consulting, employment
or management contracts and except for trade payables due less than 135 days
from the date of incurrence thereof; (d) all obligations of a Person under
capital leases; (e) all obligations or liabilities of others secured by a Lien
on any asset of a Person, whether or not such obligations or liability have been
assumed by such Person; (f) all obligations guarantied by a Person; and (g) any
other obligations or liabilities similar to those described in
clauses (a) through (f) above, inclusive, which are required by GAAP to be shown
as debt on the balance sheet of a Person; provided, however, that
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neither the interest of minority shareholders or partners in Borrower or any
Subsidiary or Partnership nor Client Accounts shall be included in this
definition of Debt.
SECTION 1.25. "DEFINED DEFAULT" means any event of default defined as
such under the terms of any contract or instrument (other than any of the Loan
Documents) or, if any such contract or instrument does not expressly define
material breaches of the obligations thereunder as events of default, any such
material breach.
SECTION 1.26. "EARNINGS" means revenues of Borrower and its
Restricted Entities from continuing operations less expenses from continuing
operations, as determined on a consolidated basis.
SECTION 1.27. "EBITDA" means, as of any date of determination, the
twelve (12) month trailing Earnings before interest, taxes, depreciation and
amortization of Borrower and Restricted Entities, less any non-recurring and
non-ordinary gains and gains from asset sales, plus any non-recurring and non-
ordinary losses and losses from asset sales (to the extent any such gains or
losses exceed in the aggregate $500,000) for any such 12 month trailing period.
SECTION 1.28. "ELIGIBLE ASSIGNEE(S)" means (i) a commercial bank
organized under the laws of the United States, or any State thereof, and having
total assets in excess of $10,000,000,000; (ii) a savings and loan association
or savings bank organized under the laws of the United States or any State
thereof, and having total assets in excess of $10,000,000,000; (iii) a
commercial bank, having total assets in excess of $10,000,000,000, organized
under the laws of any other country, or a political subdivision thereof,
provided that (x) such bank is acting through a branch or agency located in the
United States or (y) such bank is organized under the laws of a country that is
a member of the Organization of Economic Cooperation and Development or a
political subdivision of such country; and (iv) any other entity (except (x) an
individual (other than an affiliate of Borrower), (y) a union or other
collective bargaining association or (z) any ERISA plans) which is an
"accredited investor" (as defined in Regulation D under the Securities Act)
which extends credit or buys loans as one of its businesses including, but not
limited to, insurance companies, mutual funds and lease financing companies;
provided, however, that an affiliate of Borrower may be an Eligible Assignee but
shall not be (A) counted in determining the Required Lenders for purposes of
Section 9.1(a) hereof or otherwise hereunder or (B) permitted to attend any
meeting of the Lenders after the occurrence and during the continuance of an
Event of Default, or receive any information (other than notice of the
occurrence thereof) from Agent with respect to any such Event of Default; and
the phrase "all of the Lenders" contained in Section 9.1(a) hereof shall, in
such case, be deemed to mean all of the Lenders other than such affiliate of
Borrower.
SECTION 1.29. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
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SECTION 1.30. "EVENT OF DEFAULT" shall have the meaning assigned to
such term in Section 7.1 hereof.
SECTION 1.31. "EXISTING LETTERS OF CREDIT" means, as set forth in the
Recitals, the letters of credit issued under the Existing Credit Agreement
outstanding on the date hereof, which are identified by number, beneficiary and
maximum amount available for drawing in SCHEDULE 1.31 hereto.
SECTION 1.32. "FEDERAL FUNDS RATE" means an interest rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to Agent on such day on such transactions as calculated by Agent
and presented in reasonable detail to Borrower.
SECTION 1.33. "FEDERAL RESERVE BOARD" means the Board of Governors of
the Federal Reserve System, or any successor thereto.
SECTION 1.34. "FEES" means and is the collective reference to the
Commitment Fee, each Letter of Credit Fee, any prepayment fee due and payable
pursuant to Section 2.8(e) hereof and the fees described in that certain letter
dated November 4, 1994 from Wells Fargo to Borrower.
SECTION 1.35. "FISCAL YEAR" means the fiscal year of Borrower, which
shall be the twelve (12) month period ending on January 31 of each year or such
other period as Borrower may designate and Agent may agree to in writing, which
agreement will not be unreasonably withheld or denied.
SECTION 1.36. "GAAP" means (a) for purposes of Section 5.3 hereof
(other than the Compliance Certificate delivered pursuant to subsection 5.3(b)),
generally accepted accounting principles as in effect in the United States of
America, consistently applied and (b) for all other purposes hereunder
(including the Compliance Certificate delivered pursuant to subsection 5.3(b)),
generally accepted accounting principles as in effect in the United States of
America on the date of this Agreement including, without limitation, the full
consolidation of fifty percent (50%) or more owned Subsidiaries or Partnerships,
consistently applied.
SECTION 1.37. "GOVERNMENTAL APPROVAL" means an authorization,
consent, approval, order, permit, license or exemption of, qualification,
registration or filing with, or report to, any Governmental Authority.
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SECTION 1.38. "GOVERNMENTAL AUTHORITY" means any nation or
government, any state, county, municipality or other political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, including without
limitation any government or quasi-governmental authority, agency, department,
board, bureau, commission or instrumentality of the United States, any State of
the United States or any political subdivision thereof, and any tribunal of
competent jurisdiction.
SECTION 1.39. "GUARANTIES" means the guaranties of the Obligations
(other than Residual Obligations) made by the Guarantors pursuant to the
Guaranty.
SECTION 1.40. "GUARANTOR(S)" means each Restricted Subsidiary and any
other Person that becomes a Restricted Subsidiary after the date hereof.
SECTION 1.41. "GUARANTOR PLEDGE AGREEMENTS" means that certain Pledge
Agreement of even date herewith made by the Guarantors (other than Ticketmaster-
New Orleans, Inc. and TM Number One Limited) in favor of Agent on behalf of the
Lenders, substantially in the form attached hereto as EXHIBIT 1.41, and that
certain Pledge Agreement to be entered into by TM Number One Limited; PROVIDED
that any Restricted Entity that has not previously executed a Guarantor Pledge
Agreement and that acquires an ownership interest in another Restricted Entity
shall execute a counterpart Guarantor Pledge Agreement with such modifications
as Agent and Borrower may agree pursuant to Section 5.13
SECTION 1.42. "GUARANTY" means, collectively, that certain Guaranty
of even date herewith made by the Guarantors other than Ticketmaster-New
Orleans, Inc. and TM Number One Limited in favor of Agent on behalf of the
Lenders, substantially in the form attached hereto as EXHIBIT 1.42, and that
certain Guaranty to be entered into by TM Number One Limited in favor of Agent
on behalf of the Lenders pursuant to Section 5.13; provided that any Person that
becomes a Restricted Entity after the date hereof shall sign a counterpart of
EXHIBIT 1.42, with such modifications therein as Agent and Borrower shall agree.
SECTION 1.43. "HIGHEST LAWFUL RATE" means, with respect to any
Lender, the maximum non-usurious interest rate, as in effect from time to time,
which may be charged, contracted for, reserved, received or collected by such
Lender in connection with this Agreement, the Notes, the other Loan Documents or
any other documents executed in connection herewith or therewith.
SECTION 1.44. "ILLEGALITY" has the meaning set forth in Section
2.4(g).
SECTION 1.45. "INDEPENDENT ACCOUNTANTS" shall have the meaning
assigned to such term in Section 5.3(a) hereof.
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SECTION 1.46. "INTEREST PERIOD" means with respect to each LIBOR
Borrowing, the period commencing on the date of such LIBOR Borrowing and,
subject to the availability of funds, ending one (1), two (2), three (3) or six
(6) months thereafter (or such other period as is agreed to pursuant to Section
2.4(a)), as Borrower may elect pursuant to the terms hereof; provided, however,
that:
(a) any Interest Period for a LIBOR Borrowing which would otherwise
end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar month
in which case such Interest Period shall end on the next preceding Business Day;
and
(b) any Interest Period for a LIBOR Borrowing which begins on the
last Business Day of the calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month in which it
would have ended if there were a numerically corresponding day in such calendar
month.
SECTION 1.47. "INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement or other similar agreement or arrangement
designed to protect Borrower or any Restricted Entity against fluctuations in
interest rates.
SECTION 1.48. "IPO PROCEEDS" has the meaning set forth in Section
2.8(b).
SECTION 1.49. "ISSUING LENDER" means Wells Fargo, or any Person
serving as successor Agent hereunder, in its capacity as issuer of Letters of
Credit pursuant to Section 2.1(c).
SECTION 1.50. "LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount that is or at any
time thereafter may become available for drawing under all Letters of Credit
then outstanding PLUS (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Lender and not theretofore reimbursed by Borrower.
SECTION 1.51. "LETTERS OF CREDIT" shall have the meaning set forth in
Section 2.1(c) hereof.
SECTION 1.52. "LIBOR" means, for any Interest Period, the average
rate of interest at which deposits (in an amount approximately equal to the
amount of any requested LIBOR Borrowing and for the same term as the Interest
Period designated by Borrower for such Borrowing) are offered to Wells Fargo in
the London interbank Eurodollar market for delivery on the first day of such
Interest Period, as adjusted for reserve requirements and rounded upwards, if
necessary, to the next highest one sixteenth of one percent (1/16%), plus the
Applicable Margin. LIBOR shall be determined at 9:00 a.m. (California time) on
the second Business Day prior to the first day of such Interest Period.
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SECTION 1.53. "LIBOR BORROWING" shall mean any Borrowing hereunder
which accrues interest at LIBOR plus the Applicable Margin.
SECTION 1.54. "LIEN" means any mortgage, deed of trust, pledge,
hypothecation, security interest, encumbrance, lien (except for inchoate Liens
securing the payment of nondelinquent Taxes) or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, affecting any
asset, including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature thereof, and/or
the filing of or agreement to give any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.
SECTION 1.55. "LOAN ACCOUNT" has the meaning set forth in Section
2.12.
SECTION 1.56. "LOAN DOCUMENTS" means, collectively, this Agreement,
the Notes, if issued, the Guaranty, the Collateral Documents, and any
supplemental agreement or instrument executed or delivered by Borrower in
connection herewith, and all amendments, modifications or supplements, and
appendices, exhibits and schedules to, any of the foregoing.
SECTION 1.57. "LOANS" means, without duplication, the aggregate
amount of Borrowings outstanding at any time under the Term Loan Commitments,
the Revolving Loan Commitments and the Swing Line Loan Commitment.
SECTION 1.58. "MAKE-WELL AGREEMENT" shall have the meaning set forth
in Section 1.20.
SECTION 1.59. "MATERIAL ADVERSE EFFECT" means a material adverse
effect on the business, operations, assets, property, prospects, or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole.
SECTION 1.60. "MATURITY DATE" means December 31, 1999.
SECTION 1.61. "MAXIMUM LEVERAGE RATIO" has the meaning set forth in
Section 5.9(b).
SECTION 1.62. "NON-FUNDING LENDER" has the meaning set forth in
Section 2.3(g).
SECTION 1.63. "NON-RECOURSE DEBT" means Debt, whether or not required
to be reflected on the consolidated balance sheet of a Person in accordance with
GAAP, which (a) contains terms limiting recourse against such Person that are
reasonably satisfactory to Agent and (b) the failure to pay or acceleration of
which would not give rise to a right of cross-default or cross-acceleration on
the part of holders of other Debt created on or after the Closing Date.
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SECTION 1.64. "NON-U.S. LENDER" has the meaning set forth in Section
2.10(c)(i).
SECTION 1.65. "NOTES" means, collectively, the Revolving Loan Notes
in the form of EXHIBIT 1.65A and the Term Loan Notes in the form of EXHIBIT
1.65B, if either are issued, and any promissory notes that may be issued in
substitution, renewal, extension, replacement or exchange therefor.
SECTION 1.66. "OBLIGATIONS" means all present and future liabilities
and obligations of Borrower to Agent and the Lenders hereunder and all other
liabilities and obligations of Borrower to Agent and the Lenders of every kind
and description, now existing or hereafter owing, matured or unmatured, direct
or indirect, absolute or contingent, joint or several, arising under or in
connection with the Loan Documents, including any extensions, modifications and
renewals thereof and substitutions therefor.
SECTION 1.67. "OPTIONAL ADDITIONAL ADVANCE" has the meaning set forth
in Section 2.3(g).
SECTION 1.68. "PARTNERSHIP(S)" shall mean any joint venture or
partnership in which any Subsidiary is a joint venturer or general partner and
has sole or shared management control; provided, however, that except for
calculating aggregate investments pursuant to Section 6.8(k), no Unrestricted
Entity shall be deemed to be a Partnership for the purposes of this Agreement.
SECTION 1.69. "PAYMENT ACCOUNT" shall have the meaning assigned to
such term in Section 2.6(a) hereof.
SECTION 1.70. "PERMITTED BONDS" means Debt of Borrower that (i) (a)
is either (x) not guarantied or (y) if guarantied, such guaranty is subordinated
to the Guaranty, (b) has an interest rate not exceeding the higher of (x) 13.5%
per annum or (y) the sum of the rate for obligations of the United States
Treasury having a comparable term PLUS 4.0% per annum, (c) matures or commences
amortization no earlier than two years after the Maturity Date, (d) has
covenants, defaults, remedies, subordination provisions and other terms that are
reasonably satisfactory to Agent and Required Lenders, provided that all such
covenants and defaults shall be less restrictive than those comparable
provisions set forth herein and, provided, further, that all such terms and
provisions shall be consistent with those customary for publicly traded debt
securities on the date hereof and (e) is unsecured or (ii) is in an aggregate
amount sufficient to, and is applied to, prepay in full all Loans and cash
collateralize all outstanding Letters of Credit (or Borrower has returned such
Letters of Credit to Issuing Lender for cancellation or has made other provision
therefor satisfactory to Issuing Lender) and all accrued interest on the
Obligations and all accrued Fees, provided that Borrower shall terminate the
Commitments at the time of such prepayments.
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SECTION 1.71. "PERSON(S)" means and includes natural persons,
corporations, limited partnerships, general partnerships, joint ventures,
associations, companies, trusts, businesses or other organizations, whether or
not legal entities.
SECTION 1.72. "PLEDGE AGREEMENTS" means, collectively, the Borrower
Pledge Agreement, the Guarantor Pledge Agreements and the Third Party Pledge
Agreement.
SECTION 1.73. "POTENTIAL EVENT OF DEFAULT" means any condition that,
with the giving of notice by Agent or a Lender to Borrower or any Guarantor, as
appropriate, or passage of time as specified in this Agreement or any of the
other Loan Documents, or both would, unless cured or waived, become an Event of
Default.
SECTION 1.74. "PRIME RATE" means at any time the rate of interest
most recently announced within Agent at its principal office in San Francisco as
its Prime Rate, with the understanding that Agent's Prime Rate is one of its
base rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the
recording thereof in such internal publication or publications as Agent may
designate. Each change in the Prime Rate shall become effective on the date
such change is announced within Agent.
SECTION 1.75. "PRO RATA SHARE" means the percentage set forth
opposite the name of each Lender in SCHEDULE A hereto, as may be amended from
time to time in accordance herewith.
SECTION 1.76. "PROXIMATE CONTINGENT OBLIGATIONS" means Contingent
Obligations of Borrower or any Restricted Entity (without duplication) with
respect to (i) guaranties of Debt of another Person, (ii) letter of credit
reimbursement obligations, (iii) Make-Well Agreements, and (iv) contingent
obligations with respect to the termination value of any Interest Rate Agreement
in the form of a swap.
SECTION 1.77. "REGISTER" has the meaning set forth in Section
2.12(b).
SECTION 1.78. "REGULATION D" means Regulation D of the Board of
Governors of the Federal Reserve System and any successor regulation, in each
case as in effect from time to time.
SECTION 1.79. "REGULATORY CHANGE" means (a) the adoption after the
date hereof of any new, or any change in any existing, treaty or federal, state,
local or foreign law, rule, regulation (including but not limited to
Regulation D) or guideline (whether or not having the force of law), (b) the
adoption or making after the date hereof of, or compliance by Agent or any
Lender with, any interpretation, directive, request, order or decree issued
after the date hereof (whether or not having the force of law) applicable to
Agent or any Lender by any court or Governmental Authority or central bank or
other monetary authority, or compliance after the date
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hereof by Agent or any Lender with any such law, rule, regulation, guideline,
interpretation, directive, request, order or decree (adopted, made or issued
after the date hereof), or (c) any change after the date hereof in the
administration or enforcement of or under any such law, rule, regulation or
guideline by any court or Governmental Authority or central bank or other
monetary authority charged with the interpretation or administration thereof.
SECTION 1.80. "REQUIRED LENDERS" means, at any date of determination,
any Lender or Lenders holding Pro Rata Shares of the Commitments which exceed
fifty-one percent (51%) or, if the Commitments have been terminated, holding Pro
Rata Shares of the Loans outstanding on such date which exceed fifty-one percent
(51%).
SECTION 1.81. "RESIDUAL OBLIGATIONS" means Obligations which are
created hereunder or under any other Loan Document other than the full repayment
of the Loans, reimbursement of all Letter of Credit drawings, cash
collateralization of all outstanding, undrawn Letters of Credit and all other
liquidated monetary Obligations due and owing hereunder at the time of payment
in full of the Loans, all Letter of Credit drawings, such cash collateralization
and cancellation/termination of the Commitments.
SECTION 1.82. "RESPONSIBLE OFFICER" means (i) with respect to
Borrower, the Chairman, President, Chief Executive Officer, Chief Financial
Officer, Treasurer, any Executive Vice President, or the General Counsel, (ii)
with respect to any Subsidiary, the President or Chief Executive Officer thereof
and (iii) with respect to any Partnership, the President or Chief Executive
Officer of the managing general partner thereof.
SECTION 1.83. "RESTRICTED ENTITY" means, (a) as of any date, each of
Ticketmaster Corporation, an Illinois corporation, Ticketmaster-Southern
California, Inc., a California corporation, Ticketmaster-Arizona, Inc., an
Arizona corporation, Ticketmaster-Florida Management Corporation, a Florida
corporation, Ticketmaster Corporation of Washington, a Washington corporation,
Ticketmaster-Colorado, Inc., a Colorado corporation, Ticketmaster-Indiana, Inc.,
an Indiana corporation, Ticketmaster-Georgia, Inc., a Georgia corporation,
Ticketmaster-Chicago, Inc., an Illinois corporation, Ticketmaster-Pittsburgh,
Inc., a Pennsylvania corporation, Ticketmaster-Midwest, Inc., a Minnesota
corporation, Ticketmaster-Mid Atlantic, Inc., a Virginia corporation,
Ticketmaster Advertising Company, an Illinois corporation, TMC Consultants,
Inc., an Illinois corporation, Ticketmaster-New Orleans, Inc., a Louisiana
corporation, Ticketmaster-Tennessee, Inc., a Tennessee corporation,
Ticketmaster-Las Vegas, Inc., a Nevada corporation, Ticketmaster-Wisconsin,
Inc., a Wisconsin corporation, TMNY Holdings, Inc., a New York corporation,
Ticketmaster-New York, Inc., a Delaware corporation, Ticketmaster-Michigan,
Inc., a Michigan corporation, Ticketmaster Massachusetts, Inc., a Massachusetts
corporation, TM Number One Limited, a United Kingdom corporation, Ticketmaster
Europe, Inc., a Delaware corporation, Ticketmaster-Texas Management Corporation,
a Delaware corporation, Entertainment Strategies, Ltd., a California
corporation, Ticketmaster Corporation, a Delaware corporation, Ticketmaster-
Indiana, an Indiana joint venture, Ticketmaster-Southeast, a Georgia joint
venture, Ticketmaster-Northwest, a Washington
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joint venture, Ticketmaster Europe Group, a Delaware joint venture, and (b)
after the Closing Date, each Person set forth in (a) above except to the extent
such Person is sold, consolidated or dissolved in accordance with the terms of
this Credit Agreement and any other Person identified as a Restricted Entity
pursuant to Section 5.18 or Section 6.12.
SECTION 1.84. "RESTRICTED SUBSIDIARY" means a Restricted Entity that
is a Subsidiary.
SECTION 1.85. "REVOLVING LOAN COMMITMENT" and "REVOLVING LOAN
COMMITMENTS" have the meanings set forth in Section 2.1(a).
SECTION 1.86. "REVOLVING LOANS" means the Revolving Loans made by the
Lenders on or after the Closing Date pursuant to Section 2.1(a). The term
"Revolving Loans" shall not include Swing Line Loans.
SECTION 1.87. "SIGNIFICANT RESTRICTED ENTITY" means, at any date of
determination, any Restricted Entity that, as of the end of the Fiscal Year
immediately preceding such date, had either gross revenues of $1,000,000 or more
or assets with a fair market value of $1,000,000 or more.
SECTION 1.88. "SUBSIDIARY" means any corporation, the majority of
whose voting shares are at any time owned, directly or indirectly, by Borrower
and/or one or more Subsidiaries.
SECTION 1.89. "SWING LINE LENDER" means Wells Fargo, or any Person
serving as a successor Agent hereunder, in its capacity as Swing Line Lender
hereunder.
SECTION 1.90. "SWING LINE LOAN COMMITMENT" means the commitment of
Swing Line Lender to make Swing Line Loans to Borrower pursuant to Section
2.1(b).
SECTION 1.91. "SWING LINE LOANS" means the Base Rate Loans made by
Swing Line Lender to Borrower pursuant to Section 2.1(b).
SECTION 1.92. "TAXES" means any income, stamp and other taxes,
charges, fees, levies, duties, imposts, withholdings or other assessments,
together with any interest and penalties, additions to tax and additional
amounts imposed by any federal, state, local or foreign taxing authority upon
any Person or upon its assets, income, capital stock and franchises.
SECTION 1.93. "TERM LOAN" shall have the meaning set forth in
Section 2.2 hereof.
SECTION 1.94. "TERM LOAN COLLATERAL" has the meaning set forth in
Section 2.15(b).
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SECTION 1.95. "TERM LOAN COMMITMENT" means the commitment of a Lender
to make a Term Loan to Borrower pursuant to Section 2.2, and "TERM LOAN
COMMITMENTS" means such commitments of all Lenders in the aggregate.
SECTION 1.96. "THIRD PARTY PLEDGE AGREEMENT" means the Pledge
Agreement substantially in the form of EXHIBIT 1.96 annexed hereto by Third
Party Pledgor in favor of Agent for the benefit of Lenders.
SECTION 1.97. "THIRD PARTY PLEDGOR" means Paul Allen, the principal
shareholder of Borrower on the Closing Date.
SECTION 1.98. "TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS"
means, as at any date of determination, the sum of (i) the aggregate principal
amount of all outstanding Revolving Loans PLUS (ii) the Letter of Credit Usage
PLUS (iii) the aggregate principal amount of all Swing Line Loans outstanding at
such time; PROVIDED that Total Utilization of Revolving Loan Commitments shall
be determined without duplication of Revolving Loans, the proceeds of which are
used simultaneously to refund other Revolving Loans or Swing Line Loans.
SECTION 1.99. "TRADEMARK MORTGAGE AND ASSIGNMENT AGREEMENT" means a
Trademark Mortgage and Assignment Agreement in a form to be agreed by Borrower
and Agent and delivered pursuant to Section 5.13.
SECTION 2.00. "UNIFORM COMMERCIAL CODE" means the Uniform Commercial
Code in existence in each state relevant to Borrower, a Guarantor or any of the
Collateral.
SECTION 2.01. "UNRESTRICTED ENTITY" means any Person in existence on
the Closing Date and identified on SCHEDULE 2.01 hereto and any other Person
subsequently identified as an Unrestricted Entity pursuant to Section
5.3(c)(ii).
SECTION 2.02. CONSTRUCTION IN GENERAL. Unless the context of this
Agreement clearly requires otherwise, references herein to the plural include
the singular, the singular includes the plural, the part includes the whole, and
the word "including" is not limiting. References in this Agreement to any
"determination" by Agent, the Required Lenders, or any Lender, as applicable,
means good faith reasonable estimates by Agent, the Required Lenders, or such
Lender, as applicable (in the case of quantitative determinations), and good
faith reasonable beliefs by Agent, the Required Lenders, or such Lender, as
applicable (in the case of qualitative determinations). The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Article, section, subsection, Exhibit, and Schedule references are to this
Agreement unless otherwise specified. References in this Agreement or in any
Loan Document to "the knowledge of," "the receipt by," or "notice to" Borrower
shall refer to the knowledge of, the receipt by, or notice to a Responsible
Officer of Borrower. The phrase "to the best knowledge of" means, when
modifying a representation, warranty or other statement of Borrower, that the
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fact or situation described therein is known by any Responsible Officer thereof.
Unless expressly stated otherwise, where any consent of Agent or the Lenders or
Required Lenders is required herein, such consent shall not be unreasonably
withheld or delayed.
SECTION 2.03. EXHIBITS AND SCHEDULES. All of the Exhibits and
Schedules attached to this Agreement, both as originally existing or as the same
may from time to time be supplemented, modified or amended, shall be deemed
incorporated herein by this reference.
SECTION 2.04. OTHER DEFINITIONS. Terms defined in the description of
the parties, the Recitals, within another definition in Article I hereof and in
any other provisions of this Agreement or any of the other Loan Documents not
defined or referenced in Article I hereof shall have their respective defined
meanings when used herein or therein.
ARTICLE II.
THE CREDITS
SECTION 2.1. REVOLVING LOAN COMMITMENTS.
(a) REVOLVING LOANS. Subject to the terms and conditions of this
Agreement, each Lender severally (but not jointly and not jointly and severally)
agrees to make loans to Borrower on the Closing Date and from time to time
thereafter up to the Maturity Date, not to exceed at any time the aggregate
principal amount of such Lender's Pro Rata Share of the Revolving Loan
Commitments, the proceeds of which shall be used by Borrower solely for working
capital and other general corporate purposes (including, without limitation,
Acquisitions permitted hereunder); provided that approximately $110,000,000
aggregate proceeds of Revolving Loans may be applied to satisfy Debt (and
accrued interest thereon) of Borrower and any Restricted Entity outstanding on
the Closing Date. Each Lender's commitment to maintain and make Revolving Loans
to Borrower pursuant to this Section 2.1(a) is hereby called its "REVOLVING LOAN
COMMITMENT" and such commitments of all the Lenders in the aggregate are herein
called the "REVOLVING LOAN COMMITMENTS." The initial amount of each Lender's
Revolving Loan Commitment is set forth in SCHEDULE A and the aggregate initial
amount of all Revolving Loan Commitments is ONE HUNDRED THIRTY FIVE MILLION
DOLLARS ($135,000,000). The amount of the Revolving Loan Commitments shall be
reduced by the amount of all reductions thereof made pursuant to Section 2.7 or
Section 7 through the date of determination. In no event shall the aggregate
principal amount of the Revolving Loans from any Lender outstanding at any time
exceed the amount of its Revolving Loan Commitment then in effect.
On the Closing Date, Borrower shall make a Borrowing under the
Revolving Loan Commitments in an amount (approximately $110,000,000), together
with the proceeds of the Term Loans made on such date, sufficient to (i) repay
in full the outstanding "Borrowings" under the Existing Credit Agreement,
together with all accrued but unpaid interest thereon as of such date and
(ii) repay in full certain funded Debt of Borrower and Restricted Entities and
Borrower's
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notes payable to certain of its current and former shareholders, in each case
including accrued but unpaid interest thereon, identified by obligor, obligee
and outstanding principal amount on SCHEDULE 2.1(a). Borrower may from time to
time during the term of the Revolving Loan Commitments borrow, partially or
wholly repay its outstanding Borrowings thereunder, and reborrow, subject to all
the limitations, terms and conditions contained herein. Notwithstanding
anything to the contrary contained herein, all outstanding principal of and
accrued but unpaid interest on the Revolving Loans shall be due and payable in
full not later than the Maturity Date.
Notwithstanding the foregoing provisions of this Section 2.1(a), the
extensions of credit under the Revolving Loan Commitments shall be subject to
the following limitations:
(i) The amount otherwise available for borrowing under the Revolving
Loan Commitments as of any time of determination shall be reduced by the
Letter of Credit Usage and the aggregate principal amount of the Swing Line
Loans then outstanding as of such time of determination, provided that
notwithstanding the foregoing Revolving Loans may be borrowed to reimburse
Issuing Lender for the amount of any drawings under any Letter of Credit
honored by Issuing Lender and not theretofore reimbursed by Borrower or to
reimburse the Swing Line Lender for the amount of any Swing Line Loans
outstanding;
(ii) In no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then in
effect; and
(iii) In no event shall any Lender's Pro Rata Share of the Total
Utilization of Revolving Loan Commitments as of any date of determination
exceed its Revolving Loan Commitment then in effect; provided that the Pro
Rata Share of Issuing Lender and Swing Line Lender shall, for purposes of
this Section 2.1(a)(iii) be determined after giving effect to the
participations described in Sections 2.1(b)(iii) and 2.1(c)(iii).
Subject to Section 2.4(g), all Revolving Loans under this Agreement
shall be made by the Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make Revolving Loans hereunder nor shall the Revolving Loan
Commitment of any Lender be increased or decreased as a result of the default by
any other Lender in that other Lender's obligation to make Revolving Loans
hereunder.
(b) THE SWING LINE LOAN SUBFACILITY.
(i) The Swing Line Lender hereby agrees, subject to the
limitations set forth below with respect to the maximum amount of Swing Line
Loans permitted to be outstanding from time to time and subject to the other
terms and conditions hereof, to make a portion of the Revolving Loan Commitments
available to Borrower from time to time during the period from the day following
the Closing Date up to but excluding the second day prior to the Maturity Date
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by making Swing Line Loans to Borrower in an aggregate amount not exceeding the
amount of the Swing Line Loan Commitment to be used for working capital
purposes, notwithstanding the fact that such Swing Line Loans, when aggregated
with the Swing Line Lender's outstanding Revolving Loans may exceed its
Revolving Loan Commitment. The Swing Line Lender's commitment to make Swing
Line Loans to Borrower pursuant to this Section 2.1(b) is herein called its
"SWING LINE LOAN COMMITMENT," and the original amount of the Swing Line Loan
Commitment is $5,000,000 and may not be increased without the consent of the
Swing Line Lender and the Required Lenders. Amounts borrowed under this Section
2.1(b) may be repaid and reborrowed to but excluding the second day prior to the
Maturity Date on which second day all Swing Line Loans and all other amounts
owed hereunder with respect to the Swing Line Loans shall be paid in full by
Borrower. Swing Line Loans shall bear interest at the Base Rate.
Anything contained in this Agreement to the contrary notwithstanding,
the Swing Line Loan and the Swing Line Loan Commitment shall be subject to the
following limitations in the amounts and during the periods indicated:
(A) in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then in
effect; and
(B) any reduction of the Revolving Loan Commitments made pursuant to
Section 2.7 that reduces the aggregate Revolving Loan Commitments to an
amount less than the then current amount of the Swing Line Loan Commitment
shall result in an automatic corresponding reduction of the Swing Line Loan
Commitment to the amount of the Revolving Loan Commitments, as so reduced,
without any further action on the part of the Swing Line Bank.
(ii) Whenever Borrower desires that the Swing Line Lender make a
Swing Line Loan under Section 2.1(b), it shall deliver to the Swing Line Lender
a Notice of Borrowing no later than 12:00 Noon (California time) on the proposed
funding date (which shall be a Business Day). The Notice of Borrowing shall
specify (i) the proposed funding date, (ii) the amount of the Swing Line Loan
requested (which shall be in the amount of $100,000 and integral multiples of
$10,000 in excess thereof) and (iii) that the Total Utilization of Revolving
Loan Commitments (after giving effect to the proposed borrowing) does not exceed
the Revolving Loan Commitments then in effect. In lieu of delivering the above-
described Notice of Borrowing, Borrower may give the Agent telephonic notice by
the required time of any proposed borrowing of Swing Line Loans under this
Section 2.1(b); provided that such notice shall be promptly confirmed in writing
by delivery of a Notice of Borrowing to the Agent on or prior to the funding
date, which Notice of Borrowing may be given by facsimile.
(iii) With respect to any Swing Line Loans which have not
been voluntarily prepaid by Borrower pursuant to Section 2.8(a), Swing Line
Lender may, at any time in its sole and absolute discretion, deliver to Agent
(with a copy to Borrower), no later than 12:00 noon (California time) on the
first Business Day in advance of the proposed funding date, a notice
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(which shall be deemed to be a Notice of Borrowing given by Borrower) requesting
Lenders to make Revolving Loans that are Base Rate Loans on such funding date in
an amount equal to the amount of Swing Line Loans (the "REFUNDED SWING LINE
LOANS") that Swing Line Lender requests Lenders to prepay pursuant to such
notice. Anything contained in this Agreement to the contrary notwithstanding,
(i) the proceeds of such Revolving Loans made by Lenders other than Swing Line
Lender shall be immediately delivered by Agent to Swing Line Lender (and not to
Borrower) and applied to repay a corresponding portion of the Refunded Swing
Line Loans and (ii) on the day such Revolving Loans are made, Swing Line
Lender's Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be
paid with the proceeds of a Revolving Loan made by Swing Line Lender, and such
portion of the Swing Line Loans deemed to be so paid shall no longer be
outstanding as Swing Line Loans and shall no longer be due as a Swing Line Loan
but shall instead constitute part of Swing Line Lender's outstanding Revolving
Loans. Borrower hereby authorizes Agent and Swing Line Lender to charge
Borrower's accounts (other than Client Accounts) with Agent and Swing Line
Lender (up to the amount available in each such account) in order to immediately
pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent
the proceeds of such Revolving Loans made by Lenders, including the Revolving
Loan deemed to be made by Swing Line Lender, are not sufficient to repay in full
the Refunded Swing Line Loans. If any portion of any such amount paid (or
deemed to be paid) to Swing Line Lender should be recovered by or on behalf of
Borrower from Swing Line Lender in bankruptcy, by assignment for the benefit of
creditors or otherwise, the loss of the amount so recovered shall be ratably
shared among all Lenders in the manner contemplated by subsection 8.7.
If, as a result of any bankruptcy or similar proceeding with respect
to Borrower, Revolving Loans are not made pursuant to this subsection 2.1b(iii)
in an amount sufficient to repay any amounts owed to Swing Line Lender in
respect of any outstanding Swing Line Loans, each Lender shall be deemed to, and
hereby agrees to, have purchased a participation in such outstanding Swing Line
Loans in an amount equal to its Pro Rata Share of the unpaid amount together
with accrued interest thereon. Upon one Business Day's notice from Swing Line
Lender, each Lender shall deliver to Swing Line Lender an amount equal to its
respective participation in same day funds. In order to evidence such
participation each Lender agrees to enter into a participation agreement at the
request of Swing Line Lender in form and substance reasonably satisfactory to
all parties. In the event any Lender fails to make available to Swing Line
Lender the amount of such Lender's participation as provided in this paragraph,
the Swing Line Lender shall be entitled to recover such amount on demand from
such Bank together with interest thereon at the Base Rate in effect from time to
time.
Anything contained herein to the contrary notwithstanding, the
obligation of each Lender (other than the Swing Line Lender) to make Revolving
Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to the
second preceding paragraph and each such Lender's obligation to purchase a
participation in any unpaid Swing Line Loans pursuant to the immediately
preceding paragraph shall be absolute and unconditional and shall not be
affected by any circumstance, including without limitation (a) any set-off,
counterclaim, recoupment, defense or other right that such Lender may have
against the Swing Line Lender, Borrower or any other
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Person for any reason whatsoever; (b) the occurrence or continuance of an Event
of Default; (c) the occurrence of any Material Adverse Effect; (d) any breach of
this Agreement by any party hereto; or (e) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing; PROVIDED,
HOWEVER, that no Lender shall have any obligation to make a Revolving Loan for
the purpose of repaying, or to purchase any participation in, any Swing Line
Loan to the extent such Swing Line Loan increased the Total Utilization of
Revolving Loan Commitments (after giving effect to the repayment of any Loans
with the proceeds of such Swing Line Loan) and was made even though the Swing
Line Lender had actual knowledge that the conditions to making such Swing Line
Loan were not satisfied.
(c) LETTER OF CREDIT SUBFACILITY.
(i) ISSUANCE; DRAWS. As a subfacility under the Revolving Loan
Commitments, Issuing Lender agrees from time to time prior to the Maturity Date
to issue standby letters of credit for the account of Borrower in the name of
Borrower or any Restricted Entity to meet its working capital needs and for
other general corporate purposes (including, without limitation, Acquisitions
permitted hereunder) and to maintain the Existing Letters of Credit in
accordance with their terms (each, including the Existing Letters of Credit, a
"Letter of Credit" and collectively the "Letters of Credit"); provided, however,
that the form and substance of each Letter of Credit shall be subject to
approval by Issuing Lender, in its reasonable discretion; and provided further,
that the aggregate undrawn amount of all outstanding Letters of Credit shall not
at any time exceed FIVE MILLION DOLLARS ($5,000,000.00). The undrawn amount of
all Letters of Credit shall be reserved under the Revolving Loan Commitments and
shall not be available for Borrowings thereunder. Each Letter of Credit shall
be subject to the additional terms and conditions of the Letter of Credit
Agreement substantially in the form of EXHIBIT 2.1(c) hereto and related
documents, if any, required by Issuing Lender in connection with the issuance
thereof (each a "Letter of Credit Agreement" and collectively the "Letter of
Credit Agreements"). Each draft paid by Issuing Lender under a Letter of Credit
shall be deemed a Borrowing under the Revolving Loan Commitments and shall be
repaid by Borrower in accordance with the terms and conditions of this Agreement
applicable to such Borrowing; provided, however, that if, for any reason
whatsoever, there exists no availability under the Revolving Loan Commitments at
the time any draft is paid by Issuing Lender, or if there is no availability
under the Revolving Loan Commitments at such time due to any limitation on
Borrowings set forth herein, then the full amount of such draft shall be
immediately due and payable, together with interest thereon, from the date such
amount is paid by Issuing Lender to the date such amount is fully repaid by
Borrower, at the rate of interest applicable to Base Rate Borrowings.
(ii) CONDITIONS TO ISSUANCE OF LETTERS OF CREDIT. A Letter of
Credit will be issued upon satisfaction of all of the following conditions (and
provided that such issuance will not contravene any other provision of this
Agreement):
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(A) On the date of issuance of such Letter of Credit,
Borrower shall be entitled pursuant to Section 2.1(a) to a Borrowing in an
amount equal to or greater than the maximum amount that may be drawn under such
Letter of Credit;
(B) The requested Letter of Credit shall have an expiration
date not later than one (1) year after its date of issuance but in no event
subsequent to the date which is thirty (30) days prior to the Maturity Date;
(C) All conditions set forth in Section 3.1 or 3.2 hereof,
as the case may be, as to Loans shall have been satisfied as to such Letter of
Credit; and
(D) Borrower shall have executed and delivered to Issuing
Lender a Letter of Credit Agreement.
(iii) PARTICIPATION BY OTHER LENDERS. Immediately upon the
issuance by Issuing Lender of any Letter of Credit, and with respect to all of
the Existing Letters of Credit, each Lender other than Issuing Lender hereby
agrees irrevocably to purchase, and shall be deemed to have irrevocably
purchased, from Issuing Lender a participation in such Letter of Credit, and any
drawings thereunder, in accordance with each such Lender's Pro Rata Share of the
Revolving Loan Commitments, to the same extent and with the same effect as if
such other Lender had issued its Pro Rata Share of such Letter of Credit or
Existing Letter of Credit. Each Lender's obligation to fund its Pro Rata Share
of draws under a Letter of Credit or Existing Letter of Credit shall continue
notwithstanding the occurrence of any Event of Default or Potential Event of
Default and notwithstanding the effect of 11 U.S.C. Section 365(c)(2) in any
bankruptcy of Borrower or any Restricted Entity, as the case may be. Each
Letter of Credit shall be administered by Issuing Lender on behalf of all the
Lenders.
(iv) INFORMATION FROM ISSUING LENDER. Upon the request of any
other Lender, Issuing Lender shall furnish to such Lender copies of any Letter
of Credit or Existing Standby Letter of Credit and such other documentation
related thereto as may reasonably be requested by such other Lender.
SECTION 2.2. TERM LOAN COMMITMENTS.
(a) TERM LOAN. On the Closing Date, subject to the terms and
conditions of this Agreement, each Lender severally (but not jointly and not
jointly and severally) agrees to make a loan to Borrower in an amount equal to
its Pro Rata Share of FORTY MILLION DOLLARS ($40,000,000.00) ("Term Loan"). The
proceeds of the Term Loans shall be used solely to, and shall be sufficient to,
repay in full, together with the proceeds of approximately $110,000,000
Revolving Loans, the outstanding "Borrowings" under the Existing Credit
Agreement, together with all accrued but unpaid interest thereon, and to pay
Borrower's outstanding promissory notes issued to its current and former
shareholders and certain funded Debt
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of Borrower, and Restricted Entities then outstanding, in each case as is set
forth on SCHEDULE 2.1(A), together with all accrued but unpaid interest thereon.
(b) REPAYMENT. The aggregate principal amount of Term Loans,
together with all accrued and unpaid interest thereon, and all other amounts
then owed hereunder shall be due and payable in full not later than the Maturity
Date.
SECTION 2.3. NOTICE OF BORROWING.
(a) CLOSING DATE. On the Closing Date, Borrower shall deliver to
Agent a notice of borrowing substantially in the form attached hereto as
EXHIBIT 2.3 (a "Notice of Borrowing"). The Notice of Borrowing delivered
pursuant to this Section 2.3(a) shall specify (i) the Closing Date as the
funding date and (ii) the aggregate amount of the Borrowings requested to be
made, which shall be sufficient to satisfy the Debt repayment obligations under
the Existing Credit Agreement and those set forth on SCHEDULE 2.1(A).
(b) SUBSEQUENT FUNDING DATES. When Borrower desires to make a
Borrowing at any time after the Closing Date under this Article II (other than
under Section 2.1(b)), it shall deliver to Agent a Notice of Borrowing no later
than 12:00 noon (California time) on the Business Day that is the Business Day
before the proposed funding date in the case of Base Rate Borrowings and no
later than 12:00 noon (California time) on the Business Day that is three (3)
Business Days before the proposed funding date in the case of LIBOR Borrowings.
The Notice of Borrowing shall specify (i) the requested funding date (which
shall be a Business Day) in respect of the requested Borrowing, (ii) the amount
of the requested Borrowing and (iii) subject to Section 2.4(a) hereof, which
portion, if any, of such Borrowing shall be a Base Rate Borrowing and which
portion, if any, of such Borrowing will be a LIBOR Borrowing.
(c) AUTHORIZED PERSONS. Borrower shall notify Agent in writing of
the names of its officers and employees authorized to request Borrowings on
behalf of Borrower and shall provide Agent with a specimen signature of each
such officer or employee. Agent shall be entitled to rely conclusively on such
officer's or employee's authority to request Borrowings on behalf of Borrower
until Agent receives written notice to the contrary. Agent shall have no duty
to verify the authenticity of the signature appearing on any Notice of
Borrowing.
(d) NOTICE OF BORROWING IRREVOCABLE. Any Notice of Borrowing
delivered pursuant to this Section 2.3 shall be irrevocable.
(e) NOTIFICATION TO LENDERS. Promptly upon receipt of a Notice of
Borrowing, and in any event not later than the close of business on the day on
which such Notice of Borrowing is received, Agent shall notify each Lender of
the contents thereof and of such Lender's Pro Rata Share of such requested
Borrowing.
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(f) RECEIPT OF FUNDS BY AGENT. Not later than 12:00 p.m. (California
time) on the funding date of any Borrowing, each Lender shall make available its
Pro Rata Share of such Borrowing, in federal or other funds immediately
available to Agent at 420 Montgomery Street, San Francisco, California 94163.
Unless Agent determines that any applicable condition specified in Section 3.1
or 3.2 hereof, as applicable, has not been satisfied, Agent will make the funds
so received from the Lenders available on such funding date to Borrower by
crediting Borrower's demand deposit account maintained with Agent. If, prior to
funding a requested Borrowing, Agent determines that a condition precedent under
this Agreement to such Borrowing has not been satisfied (and is likely to remain
unsatisfied for at least the next two (2) Business Days), Agent shall promptly
refund to the Lenders the funds so received by Agent in respect of such
requested Borrowing; provided, however, that the Lenders shall make such funds
available to Agent in accordance with the first sentence of this subsection (f)
if Borrower shall have satisfied such condition or conditions subsequent to such
refund.
(g) AVAILABILITY OF FUNDS. Agent may assume that each Lender will
make available to Agent such Lender's Pro Rata Share of each Borrowing on the
funding date of such Borrowing in accordance with Section 2.3(f) hereof unless
Agent shall have received notice from a Lender prior to the funding date of such
Borrowing that such Lender will not make its Pro Rata Share available. Unless
so notified, Agent may, in reliance upon such assumption, make available to
Borrower on such funding date a corresponding amount and, if such Lender does
not make its Pro Rata Share available to Agent, such Lender agrees to repay to
Agent forthwith such corresponding amount (which shall at all times constitute a
current and immediately owing obligation), together with interest thereon, for
each day from the date such amount is made available to Borrower until the date
such amount is repaid to Agent, at a rate of interest equal to the rate payable
by Borrower with respect to the applicable Borrowing, together with all costs,
expenses or losses incurred by Agent in connection therewith; provided that, if
Agent failed to provide such Lender with notice of Agent's receipt of the
applicable Notice of Borrowing, such interest shall only commence to accrue on
the Business Day immediately succeeding the day on which Agent has provided such
Lender with such notice. If such Lender shall repay to Agent such corresponding
amount, such amount so repaid shall constitute such Lender's Pro Rata Share of
such Borrowing for purposes of this Agreement. If any Lender either
(i) provides Agent with prior notice that it will not make its Pro Rata Share of
any Borrowing available or (ii) fails to repay Agent for any amounts advanced by
Agent on its behalf pursuant to this subsection (g) (thereby becoming a "Non-
Funding Lender"), then, without limiting the provisions of subsection (h) below,
each of the other Lenders may (but shall not be obligated to and shall incur no
liability to Borrower or any other Person for failure to) make available to
Agent such Lender's Pro Rata Share of the Non-Funding Lender's Pro Rata Share of
the Borrowing not being funded by the Non-Funding Lender (thereby making an
"Optional Additional Advance"). In the event that the Lenders, or any of them,
fail to make an Optional Additional Advance to enable Borrower to receive the
full amount of any requested Borrowing notwithstanding the failure of a Non-
Funding Lender to fund its Pro Rata Share of such requested Borrowing, Borrower
shall have the right to substitute for such Non-Funding Lender an Eligible
Assignee reasonably acceptable to Agent. Any such new lender shall be a Lender
under this Agreement for the purpose of making an
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advance equal to the Non-Funding Lender's Pro Rata Share of the requested
Borrowing and being repaid, but once any such advance has been repaid (together
with accrued interest thereon) such new lender shall no longer be a Lender
hereunder. Notwithstanding the foregoing, in the event that Agent and Borrower
determine in their sole and absolute discretion that a Non-Funding Lender cannot
or will not make available its Pro Rata Share of any requested Borrowing,
Borrower shall have the right to substitute for such Non-Funding Lender a
permanent new lender reasonably acceptable to Agent, and such Non-Funding Lender
shall take whatever actions are deemed necessary by Agent (including, but not
limited to, the execution and delivery of an Assignment Agreement) to assign to
such new lender all of such Non-Funding Lender's Pro Rata Share of the
Commitment, whereupon such new lender shall become a Lender under this Agreement
and such Non-Funding Lender shall have no further rights or obligations
hereunder (but shall not be relieved of any obligations accrued on or before the
date of such assignment, except to the extent expressly set forth in such
Assignment Agreement).
(h) FAILURE TO FUND. The failure of any Lender to fund its Pro Rata
Share of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to fund its Pro Rata Share of such Borrowing, but no Lender shall
be responsible for any such failure of any other Lender. Notwithstanding
anything to the contrary contained herein, in the event that Borrower has
obtained from Agent the full amount of any requested Borrowing as to which a
Non-Funding Lender has failed to advance its Pro Rata Share and no Lender makes
a corresponding Optional Additional Advance or no new lender is designated to
fund such Pro Rata Share, Borrower shall upon demand of Agent promptly reimburse
Agent for the amount of such Non-Funding Lender's Pro Rata Share of such
Borrowing, together with interest from the date such Borrowing was received by
Borrower until the date of reimbursement at the rate applicable to such
Borrowing hereunder.
SECTION 2.4. CALCULATION AND PAYMENTS OF INTEREST.
(a) BORROWINGS ON CLOSING DATE AND THEREAFTER UNTIL SYNDICATION OF
LOANS. Subject to Section 2.6(c) hereof, all Borrowings made on the Closing
Date, and thereafter until the earlier of the date on which the closing of the
syndication of the Loans occurs and January 3, 1995, shall accrue interest at
either the Base Rate or LIBOR with an Interest Period of one (1) month or such
other period as Borrower and Agent may agree, and such Borrowings shall continue
to accrue interest at one of such rates, as determined by Borrower's choice
between such rates, until (i) the earlier of such dates has occurred and
(ii) Borrower has determined to convert all or a portion of such Borrowings to
LIBOR Borrowings with Interest Periods longer than one month, as permitted
pursuant to Section 2.4(f) hereof.
(b) OPTION OF BASE RATE OR LIBOR BORROWINGS. Subject to
Sections 2.1(b), 2.4(a) and 2.6(c) hereof, all Borrowings shall accrue interest
at either the Base Rate or LIBOR, as determined by Borrower and set forth in the
applicable Notice of Borrowing; provided, however, that each Base Rate Borrowing
shall be in a principal amount of at least Five Hundred Thousand Dollars
($500,000) and Ten Thousand Dollar ($10,000) integral multiples in excess of
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such amount and each LIBOR Borrowing shall be in a principal amount of at least
Five Million Dollars ($5,000,000) and Ten Thousand Dollar ($10,000) integral
multiples in excess of such amount; provided further, that not more than ten
(10) LIBOR Borrowings may be outstanding, in whole or in part, as of any date of
determination.
(c) COMPUTATION AND PAYMENT OF INTEREST. Interest on all of the
Loans shall be computed on the basis of a 360-day year, actual days elapsed.
Interest on all Base Rate Borrowings shall be due and payable in arrears on the
last Business Day of each calendar month. Interest on all LIBOR Borrowings
shall be due and payable in arrears on the last day of their respective Interest
Periods; provided, however, that for LIBOR Borrowings with Interest Periods in
excess of three (3) months, interest shall be due and payable three (3) months
after the first day of such Interest Period (and interest accruing after the end
of such three (3) month period shall be due and payable on the last day of the
Interest Period in respect thereof). Interest on each Borrowing shall accrue
from day to day from and including the date of the making of such Borrowing to
and excluding the date of any repayment thereof; provided, however, that if a
Borrowing is repaid on the same day on which it is made, then one (1) day's
interest shall be paid on that Borrowing (but if a Borrowing is made and its
proceeds are used to repay the Existing Loans or, after the Closing Date, all or
any portion of the outstanding principal balance of the Loans, interest shall be
payable for such day only on the net positive amount borrowed, if any). Each
determination of an interest rate by Agent pursuant to any provision of this
Agreement shall be conclusive and binding on Borrower in the absence of manifest
error. In the event that Borrower makes any optional prepayment of any of the
Loans pursuant to Section 2.8(a) hereof, Borrower shall also pay on such date of
prepayment all accrued but unpaid interest on the portion of such Loan or Loans
so prepaid.
(d) HIGHEST LAWFUL RATE. The rate of interest payable on the Loans
shall in no event exceed the Highest Lawful Rate. If the rate of interest
payable on the Loans is ever reduced as a result of this subsection (d) and at
any time thereafter the Highest Lawful Rate shall exceed the rate of interest
provided for in this Agreement, then the rate provided for in this Agreement
shall be increased to the Highest Lawful Rate for such period as is required so
that the total amount of interest received by each Lender is that which would
have been received by each Lender but for the operation of the first sentence of
this subsection (d). For purposes of this Section 2.4, the Highest Lawful Rate
shall be calculated with reference to the law in effect from time to time and
applicable to this transaction, including laws of the State of California and,
to the extent controlling, laws of the United States of America.
(e) RATE DESIGNATION OF INITIAL BORROWINGS. Subject to
Section 2.4(a) hereof, in the event Borrower wishes to designate any Borrowing
as a LIBOR Borrowing, Borrower shall so designate in the applicable Notice of
Borrowing. Such notice shall specify the amount of the LIBOR Borrowing and the
Interest Period proposed with respect thereto (subject to Section 2.4(b) hereof
and other applicable terms and provisions of this Agreement). The balance, if
any, of the Borrowing requested in any Notice of Borrowing not so designated by
Borrower as a LIBOR Borrowing shall automatically be deemed to be a Base Rate
Borrowing.
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(f) CONVERSION OR CONTINUATION OF RATE DESIGNATION.
(i) Subject to Section 2.4(a) hereof and paragraph (iv) of this
subsection (f), Borrower shall have the option to: (x) convert all or any
portion of the outstanding Base Rate Borrowings equal to Five Million Dollars
($5,000,000), and integral multiples of Ten Thousand Dollars ($10,000) in excess
of such amount, to a LIBOR Borrowing, (y) convert all or any portion of the
outstanding LIBOR Borrowings equal to Five Hundred Thousand Dollars ($500,000),
and integral multiples of Ten Thousand Dollars ($10,000) in excess of such
amount, to a Base Rate Borrowing and (z) upon the expiration of any Interest
Period applicable to any LIBOR Borrowing, continue all or any part of such LIBOR
Borrowing equal to Five Million Dollars ($5,000,000), and integral multiples of
Ten Thousand Dollars ($10,000) in excess of such amount, as a LIBOR Borrowing,
and the succeeding Interest Period of such continued LIBOR Borrowing shall
commence on the expiration date of the Interest Period previously applicable
thereto; provided, however, that a LIBOR Borrowing may only be converted or
continued, as the case may be, on the expiration date of the Interest Period
applicable thereto; provided further, that no outstanding LIBOR Borrowing or
Base Rate Borrowing, as the case may be, may be continued as, or be converted
into, a LIBOR Borrowing when any Event of Default has occurred and is
continuing; and provided further, that if, before the expiration of an Interest
Period of a LIBOR Borrowing, Borrower fails to deliver the appropriate Request
for Conversion/Continuation in a timely manner, such LIBOR Borrowing shall
automatically be converted to a Base Rate Borrowing.
(ii) Borrower shall by telex, telecopy, mail or personal service
deliver a Request for Conversion/Continuation, substantially in the form
attached hereto as EXHIBIT 2.4 (each a "Request for Conversion/Continuation"),
to Agent no later than 12:00 noon, California time, at least one (1) Business
Day in advance of the proposed conversion date in the case of a conversion of a
LIBOR Borrowing to a Base Rate Borrowing and at least three (3) Business Days in
advance of the proposed conversion/continuation date in the case of a conversion
of a Base Rate Borrowing to, or a continuation of a LIBOR Borrowing as, a LIBOR
Borrowing. A Request for Conversion/Continuation shall specify: (w) the
proposed conversion or continuation date (which shall be a Business Day),
(x) the amount of the Borrowing to be converted or continued, (y) the nature of
the proposed conversion/continuation and (z) in the case of a conversion of a
Base Rate Borrowing to, or continuation of a LIBOR Borrowing as, a LIBOR
Borrowing, the requested Interest Period. Agent shall promptly notify each
Lender of that Lender's Pro Rata Share of the Base Rate Borrowing or LIBOR
Borrowing (or portion thereof), as the case may be, to be converted or continued
pursuant to this subsection (f).
(iii) In lieu of delivering a Request for Conversion/
Continuation, Borrower, by one of its Responsible Officers, may give Agent
telephonic notice by the time required in paragraph (ii) of this subsection (f)
of any proposed conversion or continuation of a Base Rate Borrowing or LIBOR
Borrowing, as the case may be; provided, however, that such telephonic notice
shall be confirmed, in writing, by delivery to Agent of a Request for
Conversion/Continuation on or before the date of such proposed conversion or
continuation; provided further, that the failure of Borrower to provide such
Request for Conversion/Continuation shall not impair
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or otherwise affect the obligation of Borrower to pay interest at the rate
applicable to the Borrowing which was converted or continued by such telephonic
notice and repay such Borrowing, together with any other amounts related
thereto. Neither Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above which Agent believes in good
faith to have been given by a Responsible Officer of Borrower or for otherwise
acting in good faith under this subsection (f) and in continuing or converting
Base Rate Borrowings or LIBOR Borrowings, as the case may be, pursuant to any
telephonic notice. Agent's books and records (whether manual or electronic
entry) shall constitute prima facie evidence of the accuracy of all information
noted therein in connection with Borrower's requests for Borrowings in the
absence of manifest error.
(iv) Neither all nor any part of a Base Rate Borrowing or any
LIBOR Borrowing, as the case may be, may be converted into, or continued as, a
LIBOR Borrowing with an Interest Period that ends after the Maturity Date. If
less than all of the Base Rate Borrowings and fewer than all of the LIBOR
Borrowings outstanding at the time of conversion or continuation shall be
converted or continued, such conversion or continuation shall be made by the
Lenders in accordance with their respective Pro Rata Shares of such Borrowings.
(v) Notwithstanding anything to the contrary contained in this
Agreement, Borrower may (subject to the applicable notification and proration
provisions of this subsection (f)) prepay or convert a LIBOR Borrowing at any
time prior to the expiration date of the Interest Period applicable thereto so
long as Borrower makes payment to each Lender, pursuant to Section 2.8(e)
hereof, of any losses incurred by such Lender as a result thereof.
(g) SPECIAL EURODOLLAR CIRCUMSTANCES.
(i) In the event that any law, regulation, treaty or directive,
or any change therein or in the interpretation or application thereof, shall at
any time in the reasonable opinion of any Lender make it unlawful or impractical
(an "Illegality") for such Lender to fund or maintain a LIBOR Borrowing in the
Eurodollar market or to continue such funding or maintaining, or to determine or
charge interest rates based upon any appropriate Eurodollar rate, such Lender
shall give notice of such circumstances to Borrower, Agent and each other Lender
and in the case of any LIBOR Borrowing which is outstanding, Borrower shall, if
requested by such Lender, be deemed to have converted such Lender's Pro Rata
Share of such LIBOR Borrowing on the date specified in such request, together
with interest accrued and unpaid thereon, to a Base Rate Borrowing in a
principal amount equal to the principal amount of the LIBOR Borrowing deemed so
converted and such Lender shall not be obligated to convert or continue, as the
case may be, any further LIBOR Borrowings until such Lender shall determine that
it would no longer be unlawful or impractical to do so.
(ii) If an Illegality occurs with respect to a Lender, prior to
giving the notice pursuant to paragraph (i) of this subsection (g), the affected
Lender shall make all reasonable efforts (which shall not require such Lender to
incur a loss or take any action which
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would be disadvantageous to it as determined in its sole and absolute
discretion) to make an assignment of its rights and delegation and transfer of
its obligations hereunder to another of its offices, branches or affiliates for
the purpose of causing such Illegality to cease to exist so long as: (x) such
assignment and delegation will not create another Illegality and (y) such Lender
would be permitted under applicable law to continue to hold LIBOR Borrowings
pending such assignment and delegation.
(iii) If either: (x) Agent determines (which determination shall
be conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBOR" are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the rate of
interest for fixing LIBOR or (y) any Lender determines and so notifies Agent
that the rate of interest referred to in the definition of LIBOR is not likely
to cover adequately the cost to such Lender of advancing or maintaining a LIBOR
Borrowing, then Agent shall give Borrower and the other Lenders prompt notice
thereof, and, so long as such condition remains in effect, such Lender or
Lenders shall not be obligated to make arrangements for any further or continue
any existing LIBOR Borrowings, or to convert any Base Rate Borrowings to LIBOR
Borrowings, and on the last day of the then current Interest Period for each
LIBOR Borrowing outstanding, Borrower shall, at its option, either prepay the
affected LIBOR Borrowings or convert such LIBOR Borrowings into Base Rate
Borrowings.
SECTION 2.5. CALCULATION AND PAYMENT OF FEES. From and after the
Closing Date until the Maturity Date, Borrower agrees to pay to Agent, on behalf
of the Lenders, when due, the following Fees:
(a) COMMITMENT FEE. A commitment fee (the "Commitment Fee") payable
in arrears at the end of each fiscal quarter commencing on the Closing Date.
The Commitment Fee for any quarter shall accrue on a daily basis and for each
day shall be equal to the product of (i) the aggregate Revolving Loan
Commitments, in effect on such day MINUS the sum of (x) the Letter of Credit
Usage and (y) outstanding Revolving Loans, and (ii) a percentage determined by
reference to the Adjusted Leverage Ratio as set forth below:
Adjusted LEVERAGE RATIO Commitment Fee
PERCENTAGE
less than 2.5x 0.25%
2.5x less than 3.25x 0.3125%
3.25x less than 3.75x 0.375%
3.75x and above 0.50%
(b) LETTER OF CREDIT FEES. Letter of Credit fees (the "Letter of
Credit Fees") as follows:
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(i) a Letter of Credit fee due and payable for the account of
the Lenders (in accordance with their Pro Rata Shares) in arrears at the end of
each fiscal quarter commencing with the Closing Date, which fee shall accrue on
a daily basis and for each day shall be equal to the product of (x) the
Applicable Margin for LIBOR Borrowings in effect on such date and (y) the
maximum undrawn amount of all Letters of Credit issued and outstanding as of
such date;
(ii) a nonrefundable fronting fee of 1/4 of 1% of the maximum
undrawn amount of each Letter of Credit solely for the account of Issuing Lender
on the date of its issuance; and
(iii) such other administrative fees (solely for the account of
Issuing Lender) as are customarily charged by Issuing Lender as of such date in
connection with its amendment, negotiation or cancellation of standby letters of
credit.
(c) COMPUTATION. The Commitment Fee and the Letter of Credit Fees
described in subsections (a) and (b)(i) above shall be calculated on the basis
of a 360-day year.
SECTION 2.6. PAYMENT OF PRINCIPAL, INTEREST AND FEES; INTEREST ON
OVERDUE PAYMENTS.
(a) MANNER OF PAYMENT OF PRINCIPAL, INTEREST AND FEES. Agent shall,
and Borrower hereby authorizes Agent to, debit automatically, and without any
further instructions from Borrower, Borrower's deposit account no. 4600183941
with Agent (the "Payment Account") for all payments of principal, interest and
Fees as they become due in accordance with the terms of this Agreement. Should,
for any reason whatsoever, the funds in the Payment Account be insufficient to
pay all principal, interest and/or Fees when due, Borrower shall immediately
upon demand remit to Agent in immediately available funds the full amount of any
such deficiency. In the event that Agent debits the Payment Account for, or
Borrower otherwise pays to Agent or the Lenders, any amount in excess of the
amount then due and owing hereunder, Agent and the Lenders agree to refund to
Borrower as promptly as practicable the amount of such overpayment. To the
extent not already debited from the Payment Account in accordance with this
subsection (a), all payments due to Agent and the Lenders pursuant to this
Agreement shall be made not later than 10:00 a.m. (California time) on the due
date thereof, in lawful money of the United States of America in federal or
other funds immediately available to Agent at Agent's office located at
420 Montgomery Street, San Francisco, California 94163 , in all cases, subject
to Section 2.10 hereof, without any deduction whatsoever, including any
deduction for setoff, recoupment, counterclaim or Taxes. Agent will promptly
distribute to each Lender its share of each payment in like funds as received by
Agent for the account of the Lenders. Whenever any payment of principal or
interest with respect to a Base Rate Borrowing shall be due on a day which is
not a Business Day, the date for payment thereof shall be extended to the next
Business Day. To the extent Agent receives funds in a timely manner pursuant to
the first sentence of this subsection (a), if Agent does not make such funds
available to any Lender prior to the close of business on the date such funds
are so received by Agent, Agent shall remit to such Lender, at the
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time such funds are delivered, interest thereon, for each day from the Business
Day next following the day on which such funds are timely received by Agent
until the date such amount is paid to such Lender, at the Federal Funds Rate.
Regardless of when Agent remits funds to the Lenders hereunder, Borrower shall
receive credit for payments received before 10:00 a.m. on the day Agent receives
such funds from Borrower, and shall receive credit for payments received after
10:00 a.m. on the day after Agent receives such funds from Borrower. All debits
from the Payment Account shall be deemed to be received by Agent before
10:00 a.m. on the day Agent is required to make any such debit and for which
funds are available.
(b) RECORDATION OF LOAN PAYMENTS. Each Lender is hereby irrevocably
authorized to record on each of its Notes, if any, the date and its Pro Rata
Share of the amount of each Loan outstanding hereunder and the date and amount
of its Pro Rata Share of each Borrowing, and each payment or prepayment of
principal thereof on the schedules forming a part thereof and to attach to and
make a part of any such Note a continuation of any such schedule as and when
required. Each of the Lenders agrees that upon an assignment of all or any
portion of its Pro Rata Share of the Commitment, such Lender shall make a
notation on its Notes, if any, of the outstanding principal balance thereof as
of the date of such assignment.
(c) DEFAULT INTEREST. Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal amount of all
Loans and, to the extent permitted by applicable law, any interest payments
thereon not paid when due and any fees and other amounts then due and payable
hereunder, shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans); provided that for purposes of this Section 2.6(c) only, no
Event of Default shall be deemed to have occurred pursuant to Section 7.1(c) if
at any time Required Lenders waive such Event of Default; PROVIDED FURTHER that,
in the case of LIBOR Loans, upon the expiration of the Interest Period in effect
at the time any such increase in interest rate is effective such LIBOR Loans
shall thereupon become Base Rate Loans and shall thereafter bear interest
payable upon demand at a rate which is 2% per annum in excess of the interest
rate otherwise payable under this Agreement for Base Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this subsection
2.6(c) is not a permitted alternative to timely payment and shall not constitute
a waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Agent or any Lender.
SECTION 2.7. CANCELLATION OR REDUCTION OF REVOLVING LOAN COMMITMENTS.
At any time and from time to time, Borrower may irrevocably cancel or
permanently reduce the unused portion of the Revolving Loan Commitments by
giving Agent not less than five (5) Business Days' prior written notice thereof;
provided, however, that any partial reduction shall be in an amount equal to
Five Million Dollars ($5,000,000) or any greater whole multiple of Ten Thousand
Dollars ($10,000); and provided further, that no such voluntary
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reduction shall reduce the Revolving Loan Commitments below the aggregate unpaid
principal amount of Borrowings thereunder outstanding on the date of such
reduction. Such termination or partial reduction of the Revolving Loan
Commitments shall be effective on the date specified in Borrower's notice.
SECTION 2.8. OPTIONAL AND MANDATORY PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. To the extent not already repaid in
accordance with the terms hereof and except as set forth in Section 2.8(b),
Borrower may, upon one (1) Business Day's prior written notice to Agent in the
case of prepaid Base Rate Borrowings and three (3) Business Days' prior written
notice to Agent in the case of prepaid LIBOR Borrowings, prepay any Borrowings
at any time and from time to time, in whole or in part, (i) in the case of Base
Rate Borrowings, in principal amounts aggregating at least Five Hundred Thousand
Dollars ($500,000) or any greater whole multiple of Ten Thousand Dollars
($10,000), and (ii) in the case of LIBOR Borrowings, in principal amounts
aggregating at least Five Million Dollars ($5,000,000) or any greater whole
multiple of Ten Thousand Dollars ($10,000), by paying the principal amount to be
prepaid plus all accrued but unpaid interest thereon; provided that no advance
notice or minimum prepayment amount shall be required with respect to a
prepayment of a Swing Line Loan. Any prepayment of a Base Rate Borrowing in
accordance with the immediately preceding sentence shall be without penalty of
any kind. Prepaid LIBOR Borrowings are subject to payment of the amounts, if
any, required pursuant to Section 2.8(e) hereof.
(b) LIMITATION ON OPTIONAL PREPAYMENTS ON TERM LOANS. The Term Loans
may be prepaid only (i) out of the net proceeds of (a) the issuance of (x)
Permitted Bonds and/or (y) the initial public offering of Borrower's common
equity securities, which public offering establishes an enterprise valuation at
offering for 100% of such equity securities of at least $300,000,000 and
generates net cash proceeds of at least $40,000,000 (the entire amount of such
proceeds being "IPO Proceeds") or (ii) simultaneously with any prepayment in
full of all outstanding Revolving Loans and Swing Line Loans and the return to
Issuing Lender for cancellation, or the cash collateralization or other
provision therefor satisfactory to Issuing Lender, of all outstanding Letters of
Credit, repayment of all outstanding drawings under Letters of Credit and
termination of the Commitments; provided that all such payments or prepayments
described in this clause (ii) shall include accrued and unpaid interest on the
underlying Obligations and all accrued Fees.
(c) MANDATORY PREPAYMENTS. No later than two (2) Business Days after
receipt thereof, Borrower shall make a prepayment of the Revolving Loans, to the
extent any are outstanding, in an amount equal to (i) 100% of the net proceeds
as and when received from each Asset Sale by Borrower or any of its Restricted
Entity, which together with all other Asset Sales in such Fiscal Year, generated
aggregate next proceeds in excess of $500,000, (ii) to the extent not applied to
the Term Loans pursuant to Section 2.8(b), 100% (or the amount remaining after
any such prepayment of the Term Loans) of IPO Proceeds or the net proceeds of
any issuance of Permitted Bonds and (iii) 100% of the amount received by
Borrower or any Restricted Entity from
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any Unrestricted Entity, whether received by way of dividend, investment or
otherwise. No prepayment of Revolving Loans pursuant to this Section 2.8(c)
shall result in a mandatory reduction of the Revolving Loan Commitments.
(d) APPLICATION OF PREPAYMENTS. All prepayments made pursuant to
Section 2.8 (b) or 2.8(c) shall be applied first to Base Rate Term Loans in the
case of prepayments under Section 2.8(b) or Base Rate Revolving Loans in the
case of prepayments under Section 2.8(c), before application to LIBOR Term Loans
or LIBOR Revolving Loans, respectively. Notwithstanding the immediately
preceding sentence, to the extent any prepayment of the Loans pursuant thereto
is with respect to a LIBOR Borrowing, in order to avoid incurring breakage costs
Borrower may, at its option, delay making such prepayment for a period of up to
30 days. If however, the Interest Period with respect to any such LIBOR
Borrowing would not expire within such 30 day period, Borrower shall deposit
such proceeds within the two Business Day period provided in Section 2.8(c)
above into a special-purpose, blocked, interest-bearing account, to be
maintained with Agent and subject to Agent's security interest as hereinafter
provided. Any funds so deposited shall be held in such account until the last
day of the applicable Interest Periods, and on each such day shall be applied to
prepay the Loans in accordance herewith. To the extent necessary to effectuate
the immediately preceding sentence, Borrower hereby grants to Agent on behalf of
the Lenders a security interest in any such blocked, special-purpose account.
(e) REIMBURSEMENT OF LIBOR FUNDING LOSSES. In the event that (i)
Borrower makes an optional or mandatory prepayment (including any prepayment
upon acceleration of the Loans upon an Event of Default) of any LIBOR Borrowing
before the last day of the Interest Period for such Borrowing or (ii) fails to
make a LIBOR Borrowing, convert a Base Rate Borrowing to a LIBOR Borrowing or
continue a LIBOR Borrowing after providing Agent with a Notice of Borrowing or
Request for Conversion/Continuation specifying such Borrowing as a LIBOR
Borrowing, the conversion of a Base Rate Borrowing to a LIBOR Borrowing or the
continuation of a LIBOR Borrowing, as the case may be, Borrower shall reimburse
each Lender for all reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its LIBOR Loans and any loss, expense or
liability sustained by that Lender in connection with the liquidation or re-
employment of such funds) which that Lender may sustain as a result of its
taking or omitting to take any action in reliance upon such Notice of Borrower
or Request for Conversion/Continuation. Such reimbursements shall be due and
payable to each such Lender, upon demand. For any LIBOR funding loss incurred
by a Lender for which it seeks reimbursement from Borrower, such Lender shall
submit to Borrower such Lender's calculations demonstrating such loss, which
calculations shall be based on LIBOR rates in effect on the date the LIBOR
Borrowing was made and on the date of Borrower's prepayment of such LIBOR
Borrowing. Calculation of all amounts payable to a Lender under this subsection
2.8(e) shall be made as though that Lender had actually funded each of its
relevant LIBOR Loans through the purchase of a Eurodollar deposit bearing
interest at the London interbank offered rate referred to in the definition
"LIBOR Rate" in an amount equal to the amount of such LIBOR Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore office of that
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Lender to a domestic office of that Lender in the United States of America;
PROVIDED, HOWEVER, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this subsection 2.8(e).
SECTION 2.9. CAPITAL COSTS.
Borrower shall from time to time pay to each Lender, upon demand by
any such Lender, such additional amounts as may be specified by such Lender as
sufficient to compensate such Lender for any costs or reduced returns actually
incurred or realized by such Lender which such Lender determines are
attributable to any Regulatory Change that affects or results in an increase in
tax reserves or special deposit insurance in connection with the Loans or
affects the amount of capital required to be maintained by such Lender, or any
corporation controlling such Lender, in respect of its Pro Rata Share of the
Loans or Commitment hereunder (such compensation to be in an amount equal to any
reduction of the rate of return on the capital of such Lender to a level below
that which such Lender would have achieved but for such Regulatory Change) and
as to which Regulatory Change such Lender is generally charging its other
customers similar amounts.
SECTION 2.10. TAXES.
(a) PAYMENTS FREE OF TAXES. Borrower agrees (i) to pay all amounts
payable by it under this Agreement, any Note or any other Loan Document free and
clear of and without liability for, and, subject to the provisions of this
Section 2.10, without deduction or withholding for, any and all Taxes; and
(ii) to pay when due, and reimburse each Lender upon demand for any payment made
by such Lender of, and indemnify and hold such Lender harmless against any
liability for, (x) any and all Taxes in any way related to this Agreement or any
other Loan Document, any Loan or the Commitment, other than income and franchise
taxes imposed upon such Lender by the United States of America or any political
subdivision thereof or by any other country (or any political subdivision
thereof) in which such Lender does business or in which such Lender has an
office, and (y) all interest and penalties resulting from or related to any
delay caused by Borrower in paying any such Taxes following written notice from
such Lender to Borrower given a reasonable time prior to the imposition of such
interest or penalties. Promptly after the date on which payment of any Taxes is
due pursuant to applicable law, Borrower will furnish to Agent evidence, in form
and substance reasonably satisfactory to Agent, that Borrower has satisfied its
obligations under this Section 2.10.
(b) WITHHOLDING. If Borrower is required by applicable law to make
any deduction or withholding in respect of any Taxes from any amount payable
under this Agreement, any Note or any other Loan Document:
(i) Borrower shall notify Agent of any such requirement or any
change in any such requirement as soon as Borrower becomes aware of
it;
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(ii) Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Borrower) for its own account or (if that liability
is imposed on Agent or such Lender, as the case may be) on behalf of
and in the name of Agent or such Lender;
(iii) the sum payable by Borrower in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, Agent or such Lender, as the
case may be, receives on the due date a net sum equal to what it would
have received had no such deduction, withholding or payment been
required or made; and
(iv) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Borrower shall deliver to Agent evidence
reasonably satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to the
relevant taxing or other authority;
PROVIDED that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the assignment agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such assignment agreement, as the case may be, in respect of payments to
such Lender.
(c) EVIDENCE OF EXEMPTION FROM U.S. WITHHOLDING TAX.
(i) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.10(c), a "NON-US LENDER") shall deliver to Agent for transmission to
Borrower, on or prior to the Closing Date (in the case of each Lender
listed on the signature pages hereof) or on the effective date of the
Assignment Agreement pursuant to which it becomes a Lender (in the
case of each other Lender), and at such other times as may be
necessary in the determination of Borrower or Agent (each in the
reasonable exercise of its discretion), (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor forms),
properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with
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respect to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Loan Documents or (2) if such
Lender is not a "bank" or other Person described in Section 881(c)(3)
of the Internal Revenue Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a
Certificate re Non-Bank Status together with two original copies of
Internal Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together with any other
certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Lender
of interest payable under any of the Loan Documents.
(ii) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.10(c)(i) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, such Lender
shall (1) deliver to Agent for transmission to Company two new
original copies of Internal Revenue Service Form 1001 or 4224, or a
Certificate re Non-Bank Status and two original copies of Internal
Revenue Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required in order to confirm or establish that
such Lender is not subject to deduction or withholding of United
States federal income tax with respect to payments to such Lender
under the Loan Documents or (2) immediately notify Agent and Borrower
of its inability to deliver any such forms, certificates or other
evidence.
(iii) Borrower shall not be required to pay any additional
amount to any Non-US Lender under clause (b) of subsection 2.10 if
such Lender shall have failed to satisfy the requirements of
subsection 2.10(c)(i) or 2.10(c)(ii), as applicable; PROVIDED that if
such Lender shall have satisfied such requirements on the Closing Date
(in the case of each Lender listed on the signature pages hereof) or
on the date of the Assignment Agreement pursuant to which it became a
Lender (in the case of each other Lender), nothing in this subsection
2.10(c)(iii) shall relieve Borrower of its obligation to pay any
additional amounts pursuant to clause (b) of subsection 2.10 in the
event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is
no longer lawfully entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender
is not subject to withholding as described in subsection 2.10(c)(i).
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SECTION 2.11. DETERMINATIONS; CALCULATION. Any determination
contemplated by Section 2.09 or 2.10 hereof that is made by Agent or any Lender
shall be final and conclusive and binding upon Borrower, in the absence of
manifest error. Any Lender requesting compensation under Section 2.09 or 2.10
hereof shall provide Borrower with a copy of such Lender's calculations of the
amount it is owed.
SECTION 2.12. LOAN ACCOUNTS AND REGISTER; PRO RATA TREATMENT.
(a) LOAN ACCOUNTS. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the
indebtedness of Borrower to such Lender for each Revolving Loan and Term Loan
made by it and, in the case of Swing Line Lender, for each Swing Line Loan made
by it, including in each case the amount of principal and interest payable and
paid to such Lender from time to time hereunder. Failure to make any notation,
or any error therein, in a Loan Account shall not affect Borrower's Obligations
to such Lender. Borrower agrees that if, in the opinion of any Lender, a
promissory note or other evidence of debt is required or desirable to reflect or
enforce any Loans outstanding to or to be made by such Lender, then Borrower
shall promptly execute and deliver to such Lender one or more promissory notes
payable to such Lender to evidence the Revolving Loans and/or Term Loans
outstanding to such Lender under this Agreement from time to time. If any notes
are issued hereunder, Agent and Borrower may treat the payee of that note as the
owner of such note for all purposes until an Assignment Agreement shall have
been filed with Agent and recorded in the Register; PROVIDED, HOWEVER, that the
entries made in the Register shall be controlling in the event of a conflict.
(b) REGISTER. Agent shall maintain at its address referred to in
subsection 9.2 hereof a register (the "REGISTER") in which it shall record the
names and addresses of Lenders, each Lender's Pro Rata Share of the Commitments,
the date and amount of each Loan made hereunder and the amount of any payment
received by Agent hereunder and each Lender's share thereof. Failure to make
any such recordation, or any error therein, shall not affect Borrower's
Obligations.
(c) PROMISE TO REPAY; ENTRIES BINDING. Borrower hereby agrees to pay
when due all Obligations hereunder. The entries made in the Register and each
Loan Account shall be conclusive and binding for all purposes, absent manifest
error. In case of a conflict between the entries made in the Register and the
entries made in any Loan Account, the entries made in the Register shall be
controlling, absent manifest error. Borrower, Agent and Lenders may treat each
Person listed as a Lender in the Register as the owner of the corresponding Loan
listed therein and as a Lender hereunder for all purposes of this Agreement
unless and until an Assignment Agreement shall have become effective in
accordance with subsection 9.5; PROVIDED, HOWEVER, that the entries made in the
Register shall be controlling in the event of a conflict, absent manifest error.
Any request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and
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binding on any subsequent holder, transferee or assignee of the corresponding
Loan. The Register shall be available for inspection by Borrower or any Lender
at any reasonable time during Agent's normal business hours upon reasonable
prior notice.
(d) PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (i) each Borrowing from the Lenders shall be deemed to be requested from
the Lenders according to their Pro Rata Shares of the applicable Commitments,
(ii) each termination or reduction of the applicable Commitments shall be
applied to the respective Pro Rata Share of each Lender and (iii) each payment
or prepayment by Borrower of principal of the Loans shall be made for the
account of the Lenders according to their respective Pro Rata Shares of the
applicable Commitments (as increased or decreased by the amount of any Optional
Additional Advance made by any Lender).
SECTION 2.13. FUNDING SOURCES. Nothing herein shall or shall be
deemed to obligate any Lender to obtain the funds to make any Loan from any
particular source or place or in any particular manner, and nothing herein shall
or shall be deemed to constitute a representation by any Lender that it has
obtained or will obtain such funds in any particular place or manner.
SECTION 2.14. SURVIVAL. Borrower's obligations under Sections 2.09
and 2.10 hereof shall be Residual Obligations.
SECTION 2.15. COLLATERAL.
(a) OWNERSHIP INTERESTS OF RESTRICTED ENTITIES. As security for all
Obligations (other than Residual Obligations), Borrower shall, and shall cause
each Restricted Entity to, pledge and grant to Agent on behalf of the Lenders a
first priority Lien on all of the ownership interests held by Borrower or any
Restricted Entity in any of the Restricted Entities (whether now owned or
hereafter acquired by Borrower or any Restricted Entity) other than any
Restricted Entities the only business purpose of which is to hold a general
partnership interest or any Restricted Entity that is a Partnership and except
to the extent otherwise required by Section 6.8. Any such ownership interests
subsequently acquired shall be pledged hereunder within 5 Business Days of the
date acquired; PROVIDED that the redesignation of an Unrestricted Entity to a
Restricted Entity pursuant to Section 5.18 shall be considered an acquisition
for purposes of this Section 2.15(a).
(b) ADDITIONAL COLLATERAL FOR TERM LOANS. The Term Loans will also be
secured by a first priority Lien granted by Third Party Pledgor in favor of
Agent for the benefit of the Lenders in publicly traded common stock (with no
restriction that would prohibit or delay any sale thereof immediately upon the
occurrence of an Event of Default) or investment grade bonds ("Term Loan
Collateral") having an aggregate market value at all times equal to no less than
$52,000,000 or such amount as will cause the ratio of the outstanding Term Loans
to Term Loan Collateral to equal no more than 76.92% at all times. If the
market value of Term Loan Collateral
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at any time falls below the value necessary to satisfy such ratio, the Third
Party Pledgor shall within two (2) Business Days of such decline in value
deliver to Agent additional publicly traded common stock or investment grade
bonds that have a market value sufficient to satisfy such ratio. Upon payment
in full of the Term Loans in compliance with the provisions of this Agreement,
Agent shall return the Term Loan Collateral to the Third Party Pledgor.
(c) KEY MAN INSURANCE. All Obligations (other than Residual
Obligations) shall also be secured by the collateral assignment to Agent on
behalf of the Lenders of a key man life insurance policy covering Fredric Rosen
in the amount of $2,000,000 (which collateral assignment shall remain in effect
until Fredric Rosen is no longer a Responsible Officer of Borrower or any of its
affiliates).
(d) OWNERSHIP INTERESTS OF UNRESTRICTED ENTITIES. As security for
all Obligations (other than Residual Obligations), Borrower shall, and shall
cause each Restricted Entity to, pledge and grant to Agent on behalf of the
Lenders a first priority Lien on all of the ownership interests held by any of
them in an Unrestricted Entity to the extent required by Section 6.8.
(e) DOCUMENTATION. All of the foregoing shall be evidenced by and
subject to the terms of such documents as Agent shall reasonably require,
including without limitation the Pledge and Security Agreements. Subject to
Section 9.3 hereof, Borrower shall reimburse Agent and the Lenders, immediately
upon demand, for all reasonable costs and expenses incurred by Agent or any
Lender in connection with any of the Collateral, including, without limitation,
filing and recording fees.
SECTION 2.16. GUARANTIES. All Obligations (other than Residual
Obligations) shall be guarantied by each of the Guarantors (including, without
limitation, each Acquisition Candidate (other than a Partnership or an
Unrestricted Entity) acquired and wholly-owned by Borrower or any Restricted
Entity) pursuant to the Guaranty.
ARTICLE III.
CONDITIONS TO LOANS
SECTION 3.1. CONDITIONS PRECEDENT TO LOANS ON CLOSING DATE. The
obligation of each of the Lenders to make any Loans on the Closing Date shall be
subject to satisfaction of all of the following conditions precedent:
(a) CERTAIN LOAN DOCUMENTS. Agent shall have received all of the
following, which shall have been duly executed by the appropriate Person and in
form and substance satisfactory to Agent and its counsel, with sufficient copies
for each Lender:
(i) This Agreement, together with all required Schedules hereto;
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(ii) To the extent requested by any Lenders pursuant to Section
2.12, a Note or Notes payable to the order of such Lender;
(iii) The Notice of Borrowing in accordance with Section 2.3(a)
hereof with respect to the Loans to be made on the Closing Date;
(iv) The Pledge Agreements and other Collateral Documents,
together with all Collateral the possession of which is necessary for Agent to
perfect its security interest therein (and including stock powers executed by
the appropriate pledgors for each stock certificate constituting Collateral);
provided that Wells Fargo is hereby authorized to transfer such Collateral in
its possession as agent for the Existing Lenders to its possession as Agent
hereunder without returning such Collateral to the pledgor thereof;
(v) The Guaranties;
(vi) A duly executed Form U-1;
(vii) An Automatic Debit Order from Borrower, substantially in
the form attached hereto as EXHIBIT 3.1(a)(vii); and
(viii) Evidence satisfactory to Agent of the insurance required
by Section 5.5 hereof.
(b) CERTAIN CORPORATE DOCUMENTATION. With respect to Borrower and
each Guarantor, Agent shall have received, with sufficient copies for each
Lender:
(i) certificates of good standing from the Secretary of State of
the relevant States of Incorporation;
(ii) certified copies of the articles of incorporation and by-
laws and any amendments thereto (or, in the case of any Guarantor, a certificate
from its corporate secretary or assistant secretary that such documents have not
been amended or otherwise modified from the form thereof delivered pursuant to
the Existing Credit Agreement);
(iii) certified copies of corporate resolutions authorizing the
execution, delivery and performance of the Loan Documents to which it is a party
and the identity, authority and capacity of each Responsible Officer thereof
authorized to act on its behalf;
(iv) tax clearance certificates (if available) from the
appropriate tax authority of the State of Incorporation of such entity; and
(v) incumbency certificates for signatories on behalf of
Borrower and each Guarantor.
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(c) LEGAL OPINION. Agent shall have received (i) a legal opinion
dated the Closing Date addressed to Agent and the Lenders from Neal Gerber &
Eisenberg, counsel to Borrower and Guarantors, in substantially the form
attached hereto as EXHIBIT 3.1(c)(i) and (ii) a legal opinion dated the Closing
Date addressed to Agent and the Lenders from Foster, Pepper & Shefelman, counsel
to Third Party Pledgor, in substantially the form attached hereto as EXHIBIT
3.1(c)(ii).
(d) FINANCIAL AND OTHER INFORMATION; NO MATERIAL ADVERSE CHANGE.
Agent shall have received copies of the financial information referenced in
Section 4.6 hereof, and the financial condition, income or prospects of Borrower
and its Subsidiaries, taken as a whole, disclosed therein shall not disclose a
material adverse change from the audited financial statements as at and for the
Fiscal Year ended January 31, 1994 previously delivered by Borrower to Agent.
In addition, there shall not have occurred a material adverse change, as
determined by the Lenders in their reasonable determination, in the business,
operations, properties, assets, liabilities (contingent or matured), condition
(financial or otherwise) of Borrower and its Restricted Entities, taken as a
whole, since January 31, 1994. All other written information furnished to Agent
and the Lenders in connection with the transactions contemplated herein and in
the other Loan Documents shall be true, correct and complete in all material
respects as of the date thereof.
(e) CERTAIN CORPORATE OFFICERS' CERTIFICATES. Agent shall have
received:
(i) A certificate, in substantially the form attached hereto as
EXHIBIT 3.1(e), signed by a Responsible Officer of Borrower, dated the Closing
Date, certifying, after due inquiry, (x) that the representations and warranties
herein contained as to Borrower are true and correct in all material respects,
as if made on and as of the Closing Date (except to the extent that such
representations and warranties relate to an earlier date or reflect changes
brought about by transactions permitted hereby), (y) that no Event of Default or
Potential Event of Default has occurred and is continuing or would result from
the making of the Loans on the Closing Date, and (z) that no material adverse
change in the business, operations, properties, assets, liabilities (contingent
or matured), condition (financial or otherwise) or prospects of Borrower and
its Restricted Entities, taken as a whole, shall have occurred since the date of
Borrower's audited financial statements as at and for the Fiscal Year ended
January 31, 1994; and
(ii) A certificate or certificates of the Secretary or the
Assistant Secretary of Borrower and each Guarantor dated the Closing Date
certifying, among other things, (w) the names and true signatures of the
officers of Borrower and each Guarantor authorized to sign the Loan Documents
executed by Borrower and each Guarantor and the Notices of Borrowing to be
provided hereunder, (x) the by-laws of Borrower as in effect on the date of such
certification, (y) the resolutions of Borrower's and each Guarantor's Board of
Directors approving and authorizing the execution, delivery and performance of
the Loan Documents executed by Borrower and each Guarantor, and (z) that such
resolutions have not been modified or rescinded and remain in full force and
effect.
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(f) FEES AND EXPENSES PAID. Borrower shall have paid to Agent all of
the Fees due and payable on or before the Closing Date and all amounts then
payable to Agent or any Lender pursuant to Section 9.3 hereof which shall have
been presented for payment.
(g) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of Borrower contained in Article IV hereof and in any other Loan
Documents shall be true and correct in all material respects on and as of the
Closing Date as though made on and as of that date (except to the extent that
such representations and warranties relate to an earlier date or reflect changes
brought about by transactions permitted hereby).
(h) NO DEFAULT. No Event of Default or Potential Event of Default
shall have occurred and be continuing or would result from the making of the
Loans.
(i) NO PROHIBITION. No applicable law or government regulation shall
prohibit or impose any material adverse condition upon, any transaction
contemplated hereby or by any other Loan Document, or Borrower's ability to
perform its Obligations hereunder or thereunder.
(j) LITIGATION. No litigation or investigation shall have been
instituted or, to the knowledge of Borrower, threatened by or against Borrower
or any of its Subsidiaries that, individually or in the aggregate, if Adversely
Determined, could have a material adverse effect on the business, operations,
properties, liabilities (contingent or matured), condition (financial or
otherwise) or prospects of Borrower and its Subsidiaries, taken as a whole,
except for matters set forth on SCHEDULE 4.15. No developments shall have
occurred in any such litigation or investigation that, individually or in the
aggregate, could have a reasonable likelihood of, either (i) materially
increasing the likelihood that such litigation or investigation will be
Adversely Determined if such adverse determination could have a material adverse
effect on the business, operations, properties, liabilities (contingent or
matured), condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries, taken as a whole, or (ii) materially increasing the likelihood
that, if Adversely Determined, such litigation or investigation could,
individually or in the aggregate, have a material adverse effect on the
business, operations, properties, liabilities (contingent or matured), condition
(financial or otherwise) or prospects of Borrower and its Subsidiaries, taken as
a whole.
(k) GENERAL. All other documents, certificates, consents and
opinions in connection with the transactions contemplated by this Agreement
shall have been delivered or executed or recorded in form and substance
satisfactory to Agent, and Agent shall have received all such counterpart
originals or certified copies thereof as Agent may request.
SECTION 3.2. CONDITIONS PRECEDENT TO LOANS ON SUBSEQUENT FUNDING
DATES. The obligation of each of the Lenders to make Loans, and of Swing Line
Lender to make any Swing Line Loan and of Issuing Lender to issue any Letter of
Credit, on any date after the Closing Date shall be subject to satisfaction of
all of the following conditions precedent:
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(a) CONDITIONS TO INITIAL FUNDING SATISFIED. The conditions
precedent set forth in Section 3.1 hereof to the Lenders' obligations to make
the Loans on the Closing Date shall have been satisfied as of the Closing Date.
(b) NOTICE OF BORROWING. In the case of any Loan, Borrower shall
have delivered to Agent a Notice of Borrowing in accordance with Section 2.1(b)
or 2.3(a) hereof. Each submission by Borrower to Agent of a Notice of Borrowing
with respect to a Loan and the acceptance by Borrower of the proceeds of each
such Loan made hereunder shall constitute a representation and warranty by
Borrower as of the funding date in respect of such Loan that all the conditions
contained in this Section 3.2 have been satisfied.
(c) FEES AND EXPENSES PAID. Borrower shall have paid to Agent all of
the Fees then due and payable and all other amounts then due and payable,
including without limitation all amounts then payable to Agent or any Lender
pursuant to Section 9.3 or 9.4 hereof which shall have been presented for
payment.
(d) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of Borrower contained in Article IV hereof and in any of the other
Loan Documents shall be true and correct in all material respects on and as of
the date of the applicable Notice of Borrowing as though made on and as of that
date (except to the extent that such representations and warranties relate to an
earlier date or reflect changes brought about by transactions permitted hereby).
(e) USE OF PROCEEDS. The expenditures to be made with the proceeds
of the requested Loans shall be consistent with the applicable Sections of
Article II hereof.
(f) NO DEFAULT. No Event of Default or Potential Event of Default
shall have occurred and be continuing or would result from the making of the
requested Loans.
(g) NO PROHIBITION. No applicable law shall prohibit, prevent or
make unlawful, or impose any material adverse condition upon, the requested
Loans or any Loan Document, or Borrower's ability to perform its Obligations
hereunder or thereunder.
(h) NO MATERIAL ADVERSE EFFECT. In the reasonable determination of
Required Lenders (or Agent in the case of a Swing Line Loan or Letter of
Credit), no Material Adverse Effect has occurred since January 31, 1994.
(i) ADVERSE LITIGATION. In the reasonable determination of Required
Lenders (or Agent in the case of a Swing Line Loan or Letter of Credit), no
litigation, investigation or proceeding has been instituted and no development
in any existing litigation, proceeding or investigation has occurred that, if
Adversely Determined, could reasonably be expected to have a Material Adverse
Effect.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Agent
and each Lender as of the date hereof and the Closing Date, which
representations and warranties shall survive the execution of this Agreement and
the Closing Date and shall continue in full force and effect (except to the
extent that such representations and warranties are affected by transactions
permitted hereby) until the full and final payment, and satisfaction and
discharge, of all Obligations (other than Residual Obligations) of Borrower:
SECTION 4.1. LEGAL STATUS: BORROWER AND RESTRICTED SUBSIDIARIES.
Borrower is a corporation duly organized and existing and in good standing under
the laws of the State of Illinois, and is qualified or licensed to do business,
and is in good standing as a foreign corporation, if applicable, in all
jurisdictions in which the failure to so qualify or to be so licensed would have
a Material Adverse Effect. Each Restricted Subsidiary is a duly organized and
existing corporation in good standing under the laws of the State of its
incorporation, and is qualified or licensed to do business and is in good
standing as a foreign corporation, if applicable, in all jurisdictions in which
the failure to so qualify or to be so licensed could reasonably be expected to
have a Material Adverse Effect. Set forth on SCHEDULE 4.1 hereto is a complete
and accurate list of Restricted Subsidiaries and other corporations in which
Borrower directly or indirectly owns an interest as of the date hereof, the
jurisdictions of their incorporation, the jurisdictions in which they are
qualified to do business as foreign corporations, the number of shares of each
class of common and preferred stock outstanding, the number and percentage of
the outstanding shares of each such class owned (directly or indirectly) by
Borrower or one or more Restricted Subsidiaries, and the number of such shares
covered by all outstanding options, warrants, rights of conversion or purchase
and other similar rights both in total and held by Borrower or one or more
Restricted Subsidiaries. All of the outstanding capital stock of each
Restricted Subsidiary has been validly issued, is fully paid and nonassessable
and, as to the stock owned by Borrower or Restricted Subsidiaries, is owned by
Borrower or such Restricted Subsidiaries free and clear of all Liens except for
the Liens granted Agent on behalf of the Lenders hereunder.
SECTION 4.2. ORGANIZATION AND QUALIFICATION OF OTHER RESTRICTED
ENTITIES. Set forth on SCHEDULE 4.2 hereto is a complete and accurate list of
Restricted Entities organized as partnerships or joint ventures as of the date
hereof, showing the jurisdictions of their organization. Each such Restricted
Entity is duly licensed or qualified to do business (if applicable) in each
jurisdiction in which the failure to so qualify or to be so licensed could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.3. AUTHORIZATION AND VALIDITY. This Agreement, the Notes,
if issued, and each other Loan Document between or by and among Agent, the
Lenders, Borrower, and Guarantors delivered to Agent or any of the Lenders have
been duly authorized by, and upon their execution and delivery in accordance
with the provisions hereof will constitute
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legal, valid and binding agreements and obligations of, Borrower and each
Guarantor which executes the same, enforceable in accordance with their
respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency or similar laws limiting the enforcement of creditors'
rights generally or by equitable remedies.
SECTION 4.4. NO VIOLATION: BORROWER. The execution, delivery and
performance by Borrower of the Loan Documents executed by it do not violate any
provision of any law or regulation applicable to Borrower the violation of which
could reasonably be expected to have a Material Adverse Effect, or contravene
any provision of Borrower's articles of incorporation or by-laws, or result in
or constitute a Defined Default under any contract, obligation, indenture or
other instrument to which Borrower is a party or by which Borrower may be bound
which default could reasonably be expected to have a Material Adverse Effect.
SECTION 4.5. NO VIOLATION: GUARANTORS. The execution, delivery and
performance by each Guarantor of each of the Loan Documents executed by such
Guarantor do not violate any provision of any law or regulation applicable to
such Guarantor the violation of which could reasonably be expected to have a
Material Adverse Effect, or contravene any provision of such Guarantor's
articles of incorporation or by-laws, or result in or constitute a Defined
Default under any contract, obligation, indenture or other instrument to which
such Guarantor is a party or by which such Guarantor may be bound which default
could reasonably be expected to have a Material Adverse Effect.
SECTION 4.6. CORRECTNESS OF FINANCIAL STATEMENTS. Borrower has
heretofore delivered to Lenders, at Lenders' request, the following financial
statements and information: (i) the audited consolidated balance sheet of
Borrower and its Subsidiaries as at January 31, 1994 and the related
consolidated statements of income, stockholders' equity and cash flows of
Borrower and its Subsidiaries for the Fiscal Year then ended and (ii) the
unaudited consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as at July 31, 1994 and the related unaudited consolidated and
consolidating statements of income, stockholders' equity and cash flows of
Borrower and its Subsidiaries for the six months then ended. Borrower does not
(and will not following the funding of the initial Loans) have any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto and which in any such case is material
in relation to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Borrower and its Subsidiaries, taken as
a whole. Except as set forth on SCHEDULE 4.15, since January 1, 1994, no event
or change has occurred that has caused or evidences, either in any case or in
the aggregate, a Material Adverse Effect. Borrower has not directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any dividend or agreed to do so except as permitted by Section 6.9.
Neither Borrower nor any Restricted Subsidiary has granted a Lien on any of its
assets or properties except as permitted by this Agreement.
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SECTION 4.7. INCOME TAX RETURNS. Borrower and each Restricted
Subsidiary has filed all United States federal income tax returns and all other
material Tax returns required to be filed by it except those returns the failure
to file which could not reasonably be expected to have a Material Adverse Effect
and has paid, or made provision for the payment of, all Taxes shown to be due on
the returns so filed as well as all other assessments, governmental charges and
other Taxes which have become due, except such assessments, charges and other
Taxes, if any, that are being contested in good faith and as to which adequate
reserves have been established in accordance with GAAP. Borrower and Restricted
Subsidiary have established and are maintaining adequate reserves for Tax
liabilities, if any, in accordance with GAAP. Borrower has no knowledge of any
pending assessments or adjustments of its or any Restricted Subsidiary's income
tax payable with respect to any year, except as heretofore disclosed to Agent in
writing or which could not be reasonably expected to have a Material Adverse
Effect. Except as described in SCHEDULE 4.7 hereto, neither Borrower nor any
Restricted Subsidiary is a party to or obligated under any Tax sharing or
similar agreement.
SECTION 4.8. NO SUBORDINATION. There exists no agreement, indenture,
contract or instrument to which Borrower is a party or by which Borrower may be
bound that requires the subordination in right of payment of any of the
Obligations to any other obligation of Borrower.
SECTION 4.9. PERMITS, FRANCHISES. Borrower and each Restricted
Entity possess, and will hereafter possess, all permits, franchises and licenses
required and all copyrights, trademark rights, trade names, trade name rights,
patents, patent rights and fictitious name rights necessary to enable them to
conduct the business in which they are now engaged, without a known conflict
with the rights of others, and all of the same are valid and subsisting, except
where any such failure to obtain or any such conflict or lack of validity or
subsistence could not be reasonably expected to have a Material Adverse Effect.
Neither Borrower nor any Restricted Entity has been charged nor has it been
threatened to be charged with any infringement of, nor has it to Borrower's
knowledge infringed, any unexpired trademark, trademark registration, trade
name, patent, copyright, copyright registration, or other proprietary right of
any other Person which charge or threat could reasonably be expected to have a
Materially Adverse Effect.
SECTION 4.10. ERISA. All Employee Pension Benefit Plans (as defined
in Section 3(2) of ERISA) sponsored or maintained by Borrower or any Restricted
Entity ("Employee Plans") (a) are in material compliance with their terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, (b) have not
incurred a Reportable Event (within the meaning of Section 4043 of ERISA) unless
the 30-day notice requirement with respect to such event has been waived by the
Pension Benefit Guaranty Corporation ("PBGC") and (c) have not engaged in a
Prohibited Transaction (as defined in Section 4975 of the Code). Neither
Borrower nor any Restricted Entity has incurred any liability for a withdrawal
(either complete or partial) from a multiemployer plan under Section 4201 of
ERISA, nor do any facts known to Borrower exist for any of them to incur such
liability, which liability could reasonably be expected to have a Material
Adverse Effect. Neither
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Borrower nor any Restricted Entity has or has had any obligation to provide
post-retirement welfare benefits that has resulted in or could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.11. OTHER OBLIGATIONS. Neither Borrower nor any Restricted
Entity has committed or permitted to occur a Defined Default under any lease,
commitment, contract, instrument or obligation which Defined Default could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.12. REGULATION U. Neither Borrower nor any Subsidiary nor
any Partnership is engaged, principally or as one of its principal activities,
in the business of extending credit for the purpose of purchasing or carrying
"margin stock" (as defined by Regulation U of the Federal Reserve Board or any
other regulation thereunder). None of the proceeds of the Loans shall be used
by Borrower or any Subsidiary or Partnership to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
SECTION 4.13. ENVIRONMENTAL MATTERS.
(a) COMPLIANCE WITH LAWS. The operations of Borrower and each
Restricted Entity comply with all applicable federal, state and local
environmental, health and safety statutes, regulations and ordinances and comply
with all terms and conditions of all required environmental permits and licenses
except to the extent that any non-compliance could not reasonably be expected to
have a Material Adverse Effect.
(b) NO LIABILITY. Neither Borrower nor any Restricted Entity is
liable or contingently liable for any removal, remedial, response or other costs
or damages, or knows of any facts or conditions which may exist which may
subject Borrower or any Restricted Entity to any liability or contingent
liability, in each case that could reasonably be expected to have a Material
Adverse Effect in connection with any release of toxic or hazardous substances
or waste included on any federal, state or local hazardous chemical or substance
lists into the environment under any federal, state or local statute, regulation
or ordinance.
SECTION 4.14. CONSENTS. No Governmental Approval is required in
connection with the execution, delivery and performance by Borrower or any
Guarantor of this Agreement, the Notes, if issued, any of the other Loan
Documents or the transactions contemplated hereby or thereby or to ensure the
legality, validity or enforceability hereof or thereof, except any filing and/or
recording that may be required to perfect Agent's Lien on the Collateral.
SECTION 4.15. LITIGATION. There are no actions, suits or proceedings
pending or, to the best knowledge of Borrower, threatened against or affecting
Borrower or any Restricted Entity, or any of their respective assets before any
Governmental Authority which in
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any manner questions the validity or enforceability of this Agreement or any
other Loan Document. No litigation, investigations or proceedings of or before
any arbitrator or Governmental Authority have been instituted or, to the
knowledge of Borrower, threatened by or against Borrower or any Restricted
Entity or any of its or their properties or revenues which individually or in
the aggregate, if Adversely Determined, could reasonably be expected to have a
Material Adverse Effect, except for matters set forth on SCHEDULE 4.15 hereto.
Borrower also makes the following representation as of any date following the
Closing Date on which it is required to make (or deemed to make) any
representation or warranty pursuant to this Agreement: no developments have
occurred after the Closing Date in any such litigation, investigations or
proceedings set forth on SCHEDULE 4.15 which, individually or in the aggregate,
have a reasonable likelihood of, either (i) materially increasing the likelihood
that such litigation, proceedings or investigations will be Adversely Determined
if such adverse determination could reasonably be expected to have a Material
Adverse Effect, or (ii) materially increasing the likelihood that, if Adversely
Determined, such litigation, proceedings or investigations could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.16. TITLE TO PROPERTY; LIENS. Borrower and each Restricted
Entity has good title to, or valid and subsisting leasehold interests in, all of
its real property assets, and good title to or valid and subsisting leasehold
interests in substantially all of its other assets reflected in its books and
records as being owned or leased by it, and none of such assets or property is
subject to any Lien, except for Liens permitted hereunder.
SECTION 4.17. DISCLOSURE. All factual information contained in the
documents, certificates and written statements furnished to the Lenders by or on
behalf of Borrower or any Restricted Entity with respect to Borrower or any
Restricted Entity for use in connection with the transactions contemplated by
this Agreement, is true in all material respects and does not omit to state
material facts necessary in order to make the information not misleading.
SECTION 4.18. FISCAL YEAR. Borrower operates on a fiscal year ending
on January 31 of each year.
SECTION 4.19. EMPLOYEE MATTERS. There is no strike, work stoppage or
material labor dispute with any union or group of employees pending or, to
Borrower's knowledge, overtly threatened involving Borrower or any Restricted
Entity that could reasonably be expected to have a Material Adverse Effect.
SECTION 4.20. UNRESTRICTED ENTITIES. Except as a result of bona fide
intercompany transactions in the ordinary course of business permitted by
Section 6.15B through 6.15I or Contingent Obligations permitted by Section 6.7,
no creditor of any Unrestricted Entity has, or will have, direct or indirect
recourse, as a matter of law or contract, to the assets or revenues of Borrower
or any Restricted Entity for any of the obligations of any Unrestricted
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Entity, i.e., all Unrestricted Entities are bankruptcy remote from the Borrower
and each Restricted Entity.
ARTICLE V.
AFFIRMATIVE COVENANTS
Borrower covenants that so long as any of the Commitment remains
available or any Obligations (whether direct or contingent, liquidated or
unliquidated) of Borrower to the Lenders under any of the Loan Documents remain
outstanding (other than Residual Obligations), and until final payment in full
of all Obligations (other than Residual Obligations) of Borrower:
SECTION 5.1. PUNCTUAL PAYMENTS. Borrower shall punctually pay the
principal of and accrued interest on each of the Loans at the times and place
and in the manner specified herein and in the Notes, if issued, and any Fees or
other liabilities (including, without limitation, reimbursement obligations with
respect to Letter of Credit drawings) due hereunder or under any of the other
Loan Documents at the times and place and in the manner specified herein or
therein.
SECTION 5.2. ACCOUNTING RECORDS. Borrower shall, and shall cause
each Restricted Entity to, maintain adequate books and records in accordance
with GAAP, and permit any representative of Agent, at any reasonable time, and
as often as reasonably requested, (a) to inspect, audit and examine such books
and records, (b) to make copies of the same, (c) to inspect the assets and
properties of Borrower or any Restricted Entity and (d) to discuss with its
officers and its Independent Accountants, its business, assets, liabilities,
prospects, results of operations and financial condition; provided, however,
that nothing contained in this sentence shall require Borrower or its
Independent Accountants to disclose to Agent any information or documents if
such disclosure would constitute a waiver of, or otherwise prejudice, any
applicable confidentiality or work-product privilege with respect to any Person.
Except for disclosures to potential Lenders or participants (which disclosure
shall be conditioned on such Persons maintaining the confidentiality of the
disclosed information), the Lenders shall keep all information supplied to them
through Agent confidential, and shall not disclose such information to any third
parties without Borrower's prior consent, unless required to do so by applicable
law or regulation.
SECTION 5.3. FINANCIAL STATEMENTS. Borrower shall provide to each
Lender all of the following, in form and detail reasonably satisfactory to
Required Lenders:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not later
than ninety (90) days after the end of each Fiscal Year, (i) audited
consolidated financial statements of Borrower as of the end of such Fiscal Year
(together with copies of the combining and consolidating work papers relating
thereto) consisting of not less than a balance sheet, income statement,
statement of retained earnings and statement of cash flow, with notes thereto,
all prepared in accordance with GAAP, (ii) audited consolidated financial
statements of Borrower and
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Restricted Entities as of the end of such Fiscal Year consisting of not less
than a balance sheet, income statement, statement of retained earnings and
statement of cash flow, with notes thereto, all prepared in accordance with
GAAP, and (iii) accompanied by an unqualified opinion, in the case of the
financial statements described in clause (i), or report, in the case of
financial statements described in clause (ii) and calculations confirming
Borrower's compliance with Section 5.9 hereof as well as a written statement by
the independent certified public accountants giving the report thereon (x)
stating that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting matters, (y)
stating whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default or Potential Event of Default has
come to their attention and, (z) if such a condition or event has come to their
attention, specifying the nature and period of existence thereof; PROVIDED that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default that would
not be disclosed in the course of their audit examination from KPMG Peat Marwick
or such other independent, nationally-recognized certified public accountants
("Independent Accountants");
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, but not
later than forty-five (45) days after the end of each of Borrower's fiscal
quarters, consolidated financial statements of both (i) Borrower and its
Subsidiaries and (ii) Borrower and the Restricted Entities as of the end of such
fiscal quarter (together with copies of the combining and consolidating work
papers relating thereto) consisting in each case of not less than a balance
sheet, income statement, statement of retained earnings and statement of cash
flow, with notes thereto, which financial statements shall be prepared by
Borrower (but in accordance with GAAP, subject only to normal year-end
adjustments), setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the consolidated plan and financial projection for
the current Fiscal Year delivered pursuant to Section 5.3(d), all such
historical statements to be in reasonable detail and certified by the Chief
Financial Officer or Treasurer of Borrower that they were prepared in accordance
with GAAP and fairly present the financial condition of Borrower and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject only to changes resulting
from audit and normal year-end adjustments, together with a certificate in the
form of Exhibit 5.3(b) hereto (the "Compliance Certificate") setting forth (i)
the calculation of the Adjusted Leverage Ratio as of the end of such fiscal
quarter, and (ii) the calculations confirming Borrower's compliance with
Sections 5.9, 6.2, 6.4, 6.7, 6.9 and 6.12 hereof together with a certification
from the Chief Financial Officer or Treasurer of Borrower stating that (y) the
calculations with respect to the Adjusted Leverage Ratio and the calculations
confirming Borrower's compliance with Sections 5.9, 6.2, 6.4, 6.7, 6.9 and 6.12
were prepared in accordance with GAAP pursuant to Section 1.33(b) hereof and (z)
that no Event of Default or Potential Event of Default exists as of the end of
such fiscal quarter;
(c) MONTHLY REPORTS. As soon as available, but not later than thirty
(30) days after the end of each month, (i) combining income statements of
Borrower and Subsidiaries as of the end of such month prepared by Borrower in
accordance with GAAP, subject only to normal
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year-end audit adjustments and (ii) a certificate identifying all Persons formed
by Borrower or any of its Subsidiaries or in which Borrower or any of its
Subsidiaries have acquired a majority interest, in each case after the Closing
Date, and which Borrower elects to designate as an Unrestricted Entity by
identifying such Person as an "Unrestricted Entity" in such certificate except
to the extent such Person has been so identified in a certificate previously
delivered pursuant to this Section 5.3(c);
(d) ANNUAL PRO FORMA FINANCIAL STATEMENTS. Not later than thirty
(30) days after the end of each Fiscal Year, a projected consolidated and
consolidating plan and financial projection for such Fiscal Year and the
succeeding Fiscal Years to and including the Maturity Date, including without
limitation a projected consolidated and consolidating balance sheet and
projected consolidated and consolidating statements of income and cash flows of
Borrower and its Restricted Entities for such Fiscal Years, and an analysis of
changes in selected balance sheet accounts including, but not limited to, fixed
and intangible assets, deferred income and the interest of minority shareholders
or partners in Borrower or any Restricted Entity;
(e) MANAGEMENT LETTERS. As soon as available, a copy of the
management letter from Borrower's Independent Accountants pertaining to
Borrower's annual audit; and
(f) OTHER INFORMATION. From time to time such other information as
any Lender may reasonably request pertaining to Borrower, Subsidiaries and
Partnerships and, in the case of Partnerships as to which neither Borrower nor
any Subsidiary has any contractual right to demand such information or as to
which neither Borrower nor any Subsidiary acts as managing general partner or
co-managing general partner, Borrower shall use its reasonable best efforts to
provide such other information as any Lender may reasonably request with respect
thereto.
SECTION 5.4. EXISTENCE; COMPLIANCE WITH LAW. Borrower shall, and
shall cause each Restricted Entity to: (a) preserve and maintain its existence
and all of its licenses, permits, Governmental Approvals, rights, privileges and
franchises, except in each such instance for those the absence of which could
not reasonably be expected to have a Material Adverse Effect; (b) conduct its
business in an orderly and regular manner; (c) comply in all respects with the
provisions of all documents pursuant to which it is organized and/or which
govern its continued existence; (d) comply with the requirements of all
applicable laws, rules, regulations, orders of any Governmental Authority
except, in each instance, for those the failure to comply with which could not
be reasonably expected to have a Material Adverse Effect and all requirements
for the maintenance of its insurance, licenses, permits, Governmental Approvals,
rights, privileges and franchises, except for those the failure to maintain
which could not be reasonably expected to have a Material Adverse Effect and (e)
observe all appropriate corporate, partnership or similar formalities.
SECTION 5.5. INSURANCE. Borrower shall, and shall cause each
Restricted Entity to, maintain and keep in force insurance of the types and in
amounts customarily carried in similar lines of business, including but not
limited to fire, extended coverage, public liability,
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property damage and workers' compensation, carried with insurers and in amounts
reasonably satisfactory to Agent, and deliver to Agent from time to time at such
times as may reasonably be requested, schedules setting forth all insurance then
in effect. Agent acknowledges that, based on the evidence it has received from
Borrower on or before the date hereof, it is satisfied that Borrower and each
Restricted Entity has in effect as of the date hereof the insurance required by
this Section 5.5.
SECTION 5.6. MAINTENANCE OF PROPERTIES. Borrower shall, and shall
cause each Restricted Entity to, keep all its properties and assets material to
the conduct of its business, in good repair and condition (ordinary wear and
tear excepted).
SECTION 5.7. TAXES AND OTHER LIABILITIES. Borrower shall, and shall
cause each Restricted Entity to: (a) file when due all Federal and other
material Tax returns and pay when due any and all assessments and Taxes, except
such as it may in good faith contest by appropriate proceedings promptly
instituted and diligently conducted; provided, however, that reserves or
appropriate provisions are made to the satisfaction of Borrower's Independent
Accountants in accordance with GAAP for the eventual payment thereof in the
event it is found that such is payable by Borrower or any such Restricted
Entity; and (b) perform its contractual obligations, except where the
consequences of the failure to perform such obligations could not reasonably be
expected to have a Material Adverse Effect.
SECTION 5.8. LITIGATION. Borrower shall, and shall cause each
Restricted Entity to, promptly give notice in writing to Agent of any litigation
pending or threatened against Borrower or any Restricted Entity involving
claimed compensatory damages in excess of $1,000,000 or requesting the granting
of relief which could reasonably be expected to have a Material Adverse Effect,
Borrower shall, and shall use its best efforts to cause each Unrestricted Entity
to, promptly give notice in writing to Agent of any litigation pending or
threatened with respect to (i) substantively consolidating (a) Borrower or any
Restricted Entity and (b) any Unrestricted Entity, (ii) piercing the corporate
veil between (a) Borrower and any Restricted Entity and (b) any Unrestricted
Entity or (iii) determining that (a) any Unrestricted Entity is the alter ego of
(b) Borrower or any Restricted Entity.
SECTION 5.9. FINANCIAL CONDITION. Borrower shall maintain its
financial condition on a consolidated basis in accordance with GAAP as
demonstrated by the financial information shown on the financial statements
delivered to Lenders pursuant to Section 5.3 hereof adjusted in accordance with
Section 1.33(b) hereof as follows:
(a) LIQUIDITY RATIO. At all times cause the sum of Cash PLUS Cash
Equivalents PLUS clients' accounts receivable to be at least $1.00 more than
clients' accounts payable.
(b) MAXIMUM LEVERAGE RATIO. As of the end of each fiscal quarter of
each Fiscal Year, a ratio of (i) Debt of Borrower and its Restricted Entities
with respect to borrowed money PLUS Proximate Contingent Obligations of Borrower
and its Restricted Entities, in each case
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on such fiscal quarter end, to (ii) Cash Flow for the twelve month period then
ended of not more than the amount set forth below for the correlative period
indicated (the "Maximum Leverage Ratio"):
PERIOD MAXIMUM LEVERAGE RATIO
Closing Date through January 31, 1996 5.5 to 1
February 1, 1996 through January 31, 1997 4.75 to 1
February 1, 1997 through January 31, 1999 4.25 to 1
February 1, 1999 and thereafter 3.75 to 1;
provided that after payment in full of the Term Loans, the Maximum Leverage
Ratio shall be as follows:
PERIOD MAXIMUM LEVERAGE RATIO
Repayment of Term Loans through July 30, 1998 5.0 to 1
August 1, 1998 through July 30, 1999 4.75 to 1
August 1, 1999 and thereafter 4.25 to 1
(c) FREE CASH FLOW COVERAGE RATIO. As of the end of each fiscal
quarter of each Fiscal Year maintain a ratio of (i) Cash Flow for the twelve
month period then ended MINUS the sum of (a) Capital Expenditures made by
Borrower and its Restricted Entities during such period PLUS (b) dividends paid
in cash on any equity securities issued by Borrower during such period PLUS (c)
redemptions of any such securities or other withdrawals of equity for cash
during such period to (ii) the sum of all payments made by Borrower and
Restricted Entities on account of principal of, or interest on, Debt (including,
without limitation, payments on capital leases but excluding principal payments
of Debt under the Existing Credit Agreement or Debt described on SCHEDULE
2.1(A)) of not less than 1.5 to 1.0.
(d) MINIMUM EBITDA. The EBITDA of Borrower and its Restricted
Entities for any Fiscal Year shall not be less than (i) $29,000,000 from the
period commencing on the Closing Date and ending on January 31, 1995 and (ii)
$31,000,000 thereafter.
SECTION 5.10. NOTICE TO AGENT. Borrower shall, and, as applicable,
shall cause each Restricted Entity to, promptly give written notice to Agent in
reasonable detail of the following: (a) the occurrence of any Event of Default
or Potential Event of Default; (b) any change in the name or the organizational
structure of Borrower or any Restricted Entity; (c) any termination or
cancellation of any insurance policy which Borrower or any Restricted Entity is
required to maintain unless an equivalent policy is immediately substituted
therefor; (d) any uninsured or partially uninsured loss through liability or
property damage, or through fire, theft or any other cause affecting Borrower's
or any Restricted Entity's property in excess of an
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aggregate of $1,000,000; (e) any potential liability of Borrower or any
Restricted Subsidiary under ERISA or any notice received by Borrower or any
Restricted Subsidiary of the PBGC's intent to terminate any Employee Benefit
Plan administered by Borrower or any Restricted Subsidiary; (f) any notice,
summons, citation, directive or letter received by Borrower or any Restricted
Entity from the Environmental Protection Agency, or other Governmental
Authority, in connection with any material action or omission on the part of
Borrower or any Restricted Entity, or concerning the filing of a Lien upon,
against or in connection with Borrower or any Restricted Entity or any of their
respective assets in connection with a super fund; and (g) Borrower's entering
into an agreement in principle or a definitive agreement with respect to any
transaction the consummation of which would constitute a Change of Control.
SECTION 5.11. INTEREST RATE HEDGE. No later than 90 days after the
Closing Date, Borrower shall enter into an Interest Rate Agreement for a period
of not less than five (5) years, with terms and conditions satisfactory to
Agent, for a notional principal of $75,000,000; PROVIDED that the Interest Rate
Agreement dated February 8, 1994 between Borrower and Wells Fargo shall remain
in effect and shall be deemed to have satisfactory terms and conditions and
Agent agrees that any such additional agreement capping LIBOR at 10.50% shall be
deemed satisfactory as to such term; provided that if Permitted Bonds in an
aggregate principal amount of at least $75,000,000 are issued within such five
year period and such Permitted Bonds bear interest at a fixed rate, this
requirement shall be of no further force or effect.
SECTION 5.12. REVISIONS OR UPDATES TO SCHEDULES. Should any of the
information provided on any of the Schedules originally attached hereto become
outdated or incorrect in any material respect during any fiscal quarter of each
Fiscal Year, Borrower shall, within forty-five (45) Business Days after the end
of the relevant fiscal quarter (in the case of the last fiscal quarter of each
Fiscal Year, ninety (90) days after the end of such quarter), provide to Lenders
such revisions or updates to such Schedule(s) as may be necessary or appropriate
to update or correct such Schedule(s); provided that no such revisions or
updates to any Schedule(s) shall be deemed effective to modify warranties or
representations made thereafter or to cure any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any warranty
or representation theretofore made, unless and until Required Lenders, in their
reasonable discretion, shall have accepted in writing such revisions or updates
to such Schedules(s).
SECTION 5.13. FURTHER ASSURANCES.
(a) At any time or from time to time upon the request of Agent,
Borrower shall execute and deliver such further documents and do such other acts
and things as Agent may reasonably request in order to effect fully the purpose
of this Agreement, the other Loan Documents and any other agreement contemplated
hereby and to provide for payment with respect to the Loans in accordance with
the terms of this Agreement and the other Loan Documents,
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including, without limitation, delivering such Collateral as is required from
time to time pursuant to Section 2.15(a).
(b) No later than 90 days following the Closing Date, Borrower shall
deliver a Guaranty executed by TM Number One Limited, a United Kingdom
corporation, in form and substance reasonably satisfactory to Agent.
(c) No later than twenty days after the Closing Date, (i) Borrower
shall, and shall cause each Guarantor having trademarks registered in its name,
as applicable, to deliver to Agent (a) duly executed UCC-1 financing statements
with respect to the proceeds of Collateral and its trademarks and (b) the
Trademark Mortgage and Assignment Agreement and (ii) Agent shall deliver to
Borrower UCC-3 termination statements and such other releases as Borrower may
reasonably request with respect to the security interests of Existing Lenders.
SECTION 5.14. COMPLIANCE WITH ERISA. Borrower shall take no action,
and shall not permit any action to be taken by any Restricted Entity, which
would render the representations and warranties set forth in Section 4.10 of
this Agreement inaccurate in any material respect.
SECTION 5.15. ENVIRONMENTAL PROTECTION STATUTES; OTHER REGULATIONS.
Borrower shall, and Borrower shall cause each Restricted Entity to, comply with
all environmental protection statutes, and all laws, regulations or directives
with respect to equal employment opportunity and employee safety in all
jurisdictions in which Borrower or any Restricted Entity does business except
those the failure to comply with which could not be reasonably expected to have
a Material Adverse Effect; provided, however, that this Section 5.15 shall not
prevent Borrower or any Restricted Entity from, in good faith and with
reasonable diligence, contesting the validity or application of any such laws or
regulations by appropriate legal proceedings.
SECTION 5.16. NOTICE OF CHANGE IN MANAGEMENT. Borrower shall provide
notice to Agent, promptly upon any Responsible Officer of Borrower's becoming
aware thereof, of any change in the staffing of the positions held by persons
identified herein as Responsible Officers of Borrower or any Restricted Entity.
SECTION 5.17. PAYMENT ACCOUNT. Borrower agrees to maintain the
Payment Account with a balance sufficient to pay principal of and interest on
the Loans, Letter of Credit drawings and all Fees as and when due hereunder.
SECTION 5.18. CONVERSION OF UNRESTRICTED ENTITY TO RESTRICTED ENTITY.
Borrower may cause any Unrestricted Entity to be redesignated as a Restricted
Entity hereunder from and after the date it satisfies each of the following:
(i)(a) Borrower has given each Lender thirty days' advance written notice of the
proposed effective date of such redesignation, (b) the Unrestricted Entity's
EBITDA for its prior two fiscal years is
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positive and (c) after giving effect to such redesignation, Borrower shall be
entitled to borrow a Revolving Loan in the amount of $1.00 pursuant to Section
3.2. From and after the effective date of such redesignation, calculations of
the Adjusted Leverage Ratio and the financial maintenance covenants set forth in
Section 5.9 shall be made as if such formerly Unrestricted Entity had been a
Restricted Entity during the twelve months prior to the effective date of such
redesignation.
ARTICLE VI.
NEGATIVE COVENANTS
Borrower further covenants that so long as any of the Commitment
remains available or any Obligations (whether direct or contingent, liquidated
or unliquidated) of Borrower to the Lenders under any of the Loan Documents
remain outstanding (other than Residual Obligations), and until final payment in
full of all Obligations (other than Residual Obligations) of Borrower, without
the prior written consent of the Required Lenders (which may be withheld in
their sole and absolute discretion):
SECTION 6.1. USE OF FUNDS. Borrower shall not use any of the
proceeds of any of the Loans for purposes other than the purposes permitted by
this Agreement and in no event shall use any such proceeds in a manner that
would violate, or would result in any Lender violating, Regulation G, T, U or X
of the Federal Reserve Board.
SECTION 6.2. CAPITAL EXPENDITURES. Borrower shall not, nor shall it
permit any Restricted Entity to, make any Capital Expenditures in any Fiscal
Year in excess of an aggregate amount for all such entities of $10,000,000;
provided, however, that Capital Expenditures shall not, for purposes of this
Section 6.2, include any fixed assets acquired directly or indirectly by
Borrower in connection with an Acquisition.
SECTION 6.3. SALE-LEASEBACK. Borrower shall not, nor shall it permit
any Restricted Entity to, enter into any sale-leaseback transaction.
SECTION 6.4. OTHER INDEBTEDNESS. Borrower shall not, nor shall it
permit any Restricted Entity to, create, incur, assume or permit to exist any
Debt, including without limitation, any indebtedness or liabilities resulting
from borrowings, loans or advances, whether secured or unsecured, matured or
unmatured, liquidated or unliquidated, joint or several, or issue any preferred
stock with a mandatory redemption date prior to the second anniversary of the
Maturity Date except for (a) liabilities to Agent and the Lenders hereunder and
under the Notes, if issued, and the other Loan Documents, (b) Debt in existence
on the date hereof (and any renewal or refinancing thereof to the extent that
any such renewal or refinancing is for a commitment equal to or less than the
commitment in effect with respect to such indebtedness on the date hereof) which
has heretofore been disclosed to Agent in writing, (c) Debt permitted under
clause (a) or (b) of Section 6.8 hereof, (d) capital lease obligations (other
than those assumed in connection with an Acquisition which shall be subject to
Section 6.4(e)), not to exceed at any time
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$3,000,000 in the aggregate for Borrower and Restricted Entities, combined, (e)
other Debt of Acquisition Candidates assumed in connection with an Acquisition
or remaining outstanding thereafter provided that any such Debt is permitted
under Section 6.12(a), (f) judgment debt which is not otherwise prohibited and
would not constitute an Event of Default hereunder and (g) the Permitted Bonds.
SECTION 6.5. LIENS. Borrower shall not, nor shall it permit any
Restricted Entity to, create, incur, assume, suffer or permit to exist any Liens
on any of their assets, except for (a) Liens granted to Agent pursuant hereto
and pursuant to the other Loan Documents, (b) Liens in existence on the Closing
Date heretofore disclosed to Agent in writing, (c) carriers', warehousemen's,
mechanics', landlords', materialmen's, suppliers', tax, assessment, governmental
and other like Liens and charges arising in the ordinary course of business
securing obligations that are not incurred in connection with the obtaining of
any advance or credit and which are not overdue, or are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted,
provided that reserves or other appropriate provisions are made to the
satisfaction of Borrower's Independent Accountants in conformity with GAAP for
the eventual payment thereof in the event it is found that the same is payable
by Borrower or any Restricted Entity; (d) Liens arising in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
appeal and release bonds; (e) Liens in connection with capital leases permitted
under Section 6.4(d) hereof; (f) purchase money security interests granted to
vendors to secure the purchase in the ordinary course of business of equipment,
provided that such outstanding purchase money obligations at no time exceed
$1,000,000 in the aggregate; (g) encumbrances resulting from the rights of first
refusal, buy and sell and similar rights granted by Borrower or any Restricted
Entity on the shares of stock and Partnership interests described in SCHEDULE
6.5 hereto and (h) Liens securing Debt permitted under Section 6.4(e).
SECTION 6.6. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Borrower
shall not, nor shall it permit any Restricted Entity to: (a) merge into or
consolidate with any other Person (except for the merger of any Restricted
Entity into Borrower or into another Restricted Entity, or mergers and
consolidations which are part of an Acquisition permitted hereunder); (b) make
any substantial change in the nature of its primary business; (c) acquire all or
substantially all of the assets, stock or business of any corporation or other
entity (except for Acquisitions permitted hereby); or (d) sell, lease, assign,
transfer or otherwise dispose of any assets (including ownership interests in
any Restricted Entity) except in the ordinary course of business (except for the
rights of first refusal, buy and sell and similar provisions in or related to
the existing joint venture agreements heretofore disclosed and similar
provisions in future joint venture agreements), and in the case of any such
sale, transfer or other disposition in the ordinary course of business, the
Liens of Agent and the Lenders shall automatically be released (but shall
continue with respect to any proceeds of such sale, transfer or other
disposition to the extent required to be applied hereunder).
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SECTION 6.7. GUARANTIES. Borrower shall not, nor shall it permit any
Restricted Entity to, guaranty or become liable in any way as surety, endorser
(other than as endorser of negotiable instruments for deposit or collection in
the ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate any assets as security for, any liabilities or obligations
of any other Person, except for (a) guaranties made in respect of the
Obligations pursuant to the Guaranty, (b) existing guaranties to Persons other
than Agent and the Lenders heretofore disclosed to Agent in writing,
(c) unsecured guaranties by Borrower of obligations of a Restricted Entity
incurred by such Restricted Entity in the ordinary course of business on account
of performance bonds required in connection with arrangements with the users of
event ticketing systems, (d) unsecured guaranties given by Borrower in
connection with indebtedness permitted under Section 6.4(e) hereof, (e)
unsecured guaranties of operating leases in the ordinary course of business and
capital leases permitted under Section 6.4(d) hereof and (f) Make-Well
Agreements; PROVIDED that liability under each such agreement shall be capped at
a stated, or otherwise quantifiable in a, maximum dollar amount and PROVIDED
FURTHER that the aggregate amount of liability under all such Make-Well
Agreements outstanding at any time shall not exceed the greater of (i)
$15,000,000 or (ii) 50% of Cash Flow for the twelve months most recently ended
prior to any date of determination.
SECTION 6.8. LOANS, ADVANCES, INVESTMENTS. Borrower shall not, nor
shall it permit any Restricted Entity to, make any loans or advances to or
investments in any Person except for (a) loans by Borrower to Restricted
Entities in the ordinary course of business, (b) loans by a Restricted Entity in
the ordinary course of business to another Restricted Entity or to Borrower, (c)
investments by Borrower in Restricted Entities in the ordinary course of
business, (d) investments by a Restricted Entity in the ordinary course of
business in another Restricted Entity or in Borrower, (e) investments in
connection with the consummation of Acquisitions financed hereunder and other
Acquisitions permitted under Section 6.6 hereof, (f) investments in certificates
of deposit or banker's acceptances issued by, and other deposits with,
commercial banks organized under the laws of the United States of America or a
State thereof having capital of at least $100,000,000, (g) loans by Borrower or
a Restricted Entity to their employees and customers in the ordinary course of
business, provided that such loans do not exceed $500,000 in the aggregate at
any time, (h) investments in short term marketable obligations of the United
States of America maturing not more than one (1) year from the creation thereof,
(i) investments in the securities of other corporations which, at the time of
their acquisition, have the highest credit rating obtainable from Standard &
Poor's Corporation or Moody's Investors Service, Inc., provided that such
investments in securities of other corporations at no time exceed $1,000,000 in
the aggregate, (j) other investments which do not exceed in the aggregate
$500,000 annually which are not otherwise prohibited by another term of this
Agreement and (k) investments in Unrestricted Entities; provided that if the
aggregate amount invested by Borrower, any Subsidiary or Partnership,
individually or in the aggregate, in any Unrestricted Entity (whether by stock
purchase, loan, capital contribution or otherwise) exceeds $2,500,000, Borrower
shall cause the ownership interests in such Unrestricted Entity (or, if such
Unrestricted Entity is organized as a partnership or joint venture, the
ownership interests in the Person that holds 100% of the Person affiliated with
Borrower who participates in such partnership, i.e. the general partner or joint
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venturer) to be promptly pledged to Agent on behalf of Lender's pursuant to
Section 2.15(d), for example if there is an aggregate investment of $5,000,000
in partnership A, in which Borrower's affiliate B acts as general partner and
100% of the stock of B is owned by C, the stock of C shall be so pledged;
provided, further, that, except in accordance with this Section 6.8(k), neither
Borrower nor any Restricted Entity may make any investment (whether by stock
purchase, loan, capital contribution or otherwise) in any Person that engages in
a line of business different from, or not related to, those engaged in by
Borrower and the Restricted Entities on the Closing Date or by any Person that
subsequently becomes a Restricted Entity in accordance with the terms hereof.
SECTION 6.9. DIVIDENDS, DISTRIBUTIONS. Borrower shall not declare or
pay any dividend or distribution, either in cash or any other property (other
than stock dividends or stock splits), on Borrower's stock or equity securities
now or hereafter outstanding; or redeem, retire, purchase or otherwise acquire
any shares of any class of Borrower's stock or equity securities now or
hereafter outstanding, except as set forth on SCHEDULE 6.9; provided that no
such dividend or distribution shall be paid if it would result in the occurrence
of a Potential Event of Default or Event of Default or at any time during the
continuation of a Potential Event of Default or an Event of Default. Borrower
will not, and will not permit any of its Restricted Entities to, create or
otherwise cause to become effective any consensual encumbrance or restriction of
any kind on the ability of any Restricted Entity to pay dividends or make any
other distributions on any of such Restricted Entity capital stock owned by
Borrower or any other Restricted Entity.
SECTION 6.10. PARTNERSHIPS. Borrower shall not become, nor shall it
permit any Restricted Entity to become, a general partner in any partnership or
a joint venturer in any joint venture, except for Partnerships in existence on
the date hereof which have heretofore been disclosed to Agent in writing, and
Partnerships which are part of an Acquisition or new business venture permitted
hereunder as an Unrestricted Entity.
SECTION 6.11. TRANSACTIONS WITH AFFILIATES. Borrower shall not, nor
shall it permit any Restricted Entity to, directly or indirectly enter into any
transaction with or for the benefit of an affiliate on terms more favorable to
the affiliate than would have been obtainable in arms' length dealings;
provided, however, that Borrower and Restricted Entities shall be permitted to
provide services and office space to Borrower and other Restricted Entities on
terms that are not arms' length. As used in this Section 6.11, (x) "affiliate"
means any Person which directly or indirectly controls, is controlled by, or is
under common control with, Borrower, and (y) "control" (including, with
correlative meanings, "controlled by" and "under common control with") means
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise).
SECTION 6.12. ACQUISITIONS. Borrower shall not make, nor shall
Borrower permit any Restricted Entity to make, any Acquisition unless such
Acquisition meets all of the following criteria:
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(a) The aggregate Debt of all Acquisition Candidates acquired in any
Fiscal Year shall not exceed $1,000,000 except as set forth on SCHEDULE 6.12;
(b) The Acquisition bid is part of a negotiated transaction that is
not opposed by the board of directors of the Acquisition Candidate pursuant to a
resolution passed by the board;
(c) The Acquisition Candidate engages principally in the same
business as that then engaged in by Borrower and its Restricted Entities or a
related business;
(d) Borrower or the appropriate Restricted Entity grants to Agent on
behalf of the Lenders a first priority Lien on its percentage interest in the
stock of the Acquisition Candidate as security for the Loans and, if the
Acquisition Candidate is a directly or indirectly wholly-owned Subsidiary of
Borrower or any Guarantor, the Acquisition Candidate shall become a party to the
Guaranty;
(e) In connection with the consummation of any such Acquisition, all
other customary conditions to a purchaser's obligations are satisfied,
including, without limitation, receipt of representations and warranties and
opinions of counsel (if and to the extent obtained by Borrower or such
Restricted Entity);
(f) If the Acquisition Candidate is located outside of the United
States, applicable law or the structure of the Acquisition permits the effective
repatriation of such Acquisition Candidate's after-Tax earnings to the United
States; and
(g) the Acquisition Candidate's EBITDA for the twelve-month period
immediately preceding the Acquisition is positive before deducting its corporate
overhead expense.
Upon completion of an Acquisition in compliance with the provisions of
this Section 6.12, Borrower may give notice to the Lenders that the Acquisition
Candidate shall thereafter be a Restricted Entity for purposes of this
Agreement. Notwithstanding the foregoing, the Borrower and Restricted Entities
may acquire or make investments in Persons not satisfying any of the foregoing
requirements; provided that after making such acquisition or investment the
creditors of such Person shall not have direct or indirect recourse of any kind
whatsoever to the assets or revenues of the Borrower or any Restricted Entity
except as a result of bona fide intercompany transactions in the ordinary course
of business permitted by Section 6.15B through 6.15I or Contingent Obligations
permitted by Section 6.7, i.e. such Person shall be bankruptcy remote from
Borrower and each Restricted Entity. Except as set forth above or in Section
5.18, no Person may become a "Restricted Entity" under this Agreement without
the consent of Required Lenders.
SECTION 6.13. PREPAYMENT OF INDEBTEDNESS. Neither Borrower nor any
Restricted Entity shall voluntarily purchase, acquire, redeem or retire, make
any payment or
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distribution on account of, or reduce any Debt, prior to its originally stated
maturity (or its stated maturity on the date hereof, in the case of Debt
outstanding on the date hereof), or directly or indirectly become obligated to
do any of the foregoing by amending the terms thereof or otherwise, except for:
(i) Debt permitted under Section 6.4(c) or (ii) prepayments of the Obligations
or of other amounts due pursuant to the Loan Documents.
SECTION 6.14. SPECULATIVE TRANSACTIONS; CONDUCT OF BUSINESS. Except
as provided in Section 5.11 hereof, Borrower shall not, and Borrower shall not
permit any Restricted Entity to, engage in any transactions involving commodity
options or futures contracts except for foreign forward exchange contracts,
option contracts or future commitments with respect to economic hedging programs
or supplies, incidental, in each case, to the conduct of Borrower's or such
Restricted Entity's business. Neither Borrower nor any Restricted Entity shall
engage in any line of business other than those engaged in on the Closing Date
and those engaged in by any Person who becomes a Restricted Entity thereafter in
accordance with the terms hereof and lines of business related thereto.
SECTION 6.15. UNRESTRICTED ENTITIES.
A. Except as a result of bona fide intercompany transactions in the
ordinary course of business permitted by Section 6.15B through 6.15I or
Contingent Obligations permitted by Section 6.7, the creditors of any
Unrestricted Entity shall not have, direct or indirect, recourse of any kind
whatsoever to the assets or revenues of Borrower or any Restricted Entity for
the liabilities of such Unrestricted Entity, i.e., all Unrestricted Entities
shall be bankruptcy remote from Borrower and each Restricted Entity.
B. A majority of the members of the Board of Directors of Borrower
and each Restricted Entity shall not serve as a member of the Board of Directors
of any Unrestricted Entity.
C. There shall not be a substantial identity of the officers of
Borrower or any Restricted Entity on the one hand and any Unrestricted Entity on
the other.
D. Neither Borrower nor any Restricted Entity shall direct or
participate in the day-to-day management of any Unrestricted Entity's operations
except to the extent (i) not prohibited by this Agreement or (ii) consistent
with its ownership interest and the supervisory activities of other equity
owners similarly situated.
E. Neither Borrower nor any Restricted Entity shall purchase or
otherwise receive any fixed assets, inventory or other goods of any nature or
services from any Unrestricted Entity or sell or otherwise provide any fixed
assets, inventory or other goods of any nature or services to any Unrestricted
Entity except (i) dividends paid by any Unrestricted Entity to the extent
permitted by applicable law, (ii) as otherwise permitted by this Agreement or
(iii) if a determination cannot be made that the terms of such transaction are
at arms' length pursuant to Section 6.11 because of an absence of comparable
transactions, those transactions that are on fair
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and competitive terms, as determined in good faith by a Responsible Officer of
each of Borrower and such Unrestricted Entity.
F. Borrower shall not fail to maintain its assets and transactions
and the assets and transactions of its Restricted Entities separately from those
of its Unrestricted Entities or to reflect such assets and transactions in
financial statements separate and distinct from those of its Unrestricted
Entities or to evidence such assets and transactions by appropriate entries in
books and records separate and distinct from those of its Unrestricted Entities
except to extent required in the preparation of consolidated financial
statements. Borrower shall not deliver or permit the delivery of its financial
statements to any creditor of any Unrestricted Entity and shall not deliver the
financial statements of any Unrestricted Entity to any of its creditors;
PROVIDED nothing herein shall be construed to prohibit Borrower from delivering
consolidated financial statements to any Person.
G. Neither Borrower nor any Restricted Entity shall maintain any
joint account with any Unrestricted Entity or be a party, whether as co-obligor
or otherwise, to any agreement to which any Unrestricted Entity is a party or
become liable as a guarantor or otherwise with respect to any debt or
contractual obligation of any Unrestricted Entity unless (i) such Unrestricted
Entity is organized as a partnership or joint venture, (ii) Borrower and its
affiliates own no more than 80% of the ownership interests of such Unrestricted
Entity and (iii) the other owners of such Unrestricted Entity become so liable
in an amount proportional to their ownership interests; provided that in no
event shall the aggregate liability of Borrower and Restricted Entities
permitted hereby exceed $10,000,000.
H. Neither Borrower nor any Restricted Entity shall make any payment
or distribution of assets with respect to any obligation of any Unrestricted
Entity or grant a Lien on any of its assets to secure any obligation of any
Unrestricted Entity.
I. With the exception of bona fide trade payables and receivables
arising in the ordinary course of business, neither Borrower nor any Restricted
Entity shall extend credit to any Unrestricted Entity unless evidenced by a
promissory note bearing interest at a market rate but may in its sole discretion
purchase equity securities of, and make capital contributions to, any
Unrestricted Entity.
J. Each Unrestricted Entity shall observe all appropriate corporate,
partnership or similar formalities.
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ARTICLE VII.
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any one or more of
the following events, acts or occurrences shall constitute an "Event of Default"
under this Agreement:
(a) PAYMENTS. Borrower shall fail to pay within the earlier of
(i) three (3) Business Days after the date when due and (ii) one (1) Business
Day after notice from Agent of Borrower's failure to pay when due, any
principal, interest, Fees, expenses or other amounts payable hereunder or under
any of the Notes or the other Loan Documents.
(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made by Borrower hereunder or made under any of the other Loan Documents shall
prove to be incorrect in any material respect when made.
(c) BREACH OF CERTAIN COVENANTS. Borrower shall fail duly and
punctually to observe or perform any obligation, agreement or other provision
contained in Sections 5.4 (insofar as such Section requires the continued
existence of Borrower and each Restricted Entity), 5.9, 6.1, 6.2, 6.3, 6.4, 6.5,
6.6, 6.7, 6.8, 6.9, 6.12 and 6.13 hereof; PROVIDED that if the failure to
perform or observe any obligation, agreement or other provision contained in
Sections 6.4, 6.5, 6.7 or 6.8 results from (x) the incurrence of Debt or a
Contingent Obligation or (y) the making of any loan, advance or investment or
(z) the granting of any lien to secure an obligation, in each case in an
individual amount of less than $1,000,000, such failure shall not constitute an
Event of Default hereunder unless it has continued unremedied or unwaived for a
period of ten (10) days after the earlier of (i) Agent's giving notice to
Borrower of such failure and (ii) the date on which a Responsible Officer of
Borrower has knowledge of such failure.
(d) BREACH OF CERTAIN OTHER COVENANTS. Borrower shall fail duly and
punctually to observe or perform any obligation, agreement or other provision
contained in Sections 5.3, 5.8, 5.10(c) through (f), inclusive or any
Unrestricted Entity shall fail duly and punctually to observe or perform any
material obligation, agreement or provision contained in Section 6.15, and such
failure shall continue unremedied or unwaived for a period of ten (10) days
after the earlier of (i) Agent's giving notice to Borrower of such failure and
(ii) the date on which a Responsible Officer of Borrower has knowledge of such
failure.
(e) OTHER DEFAULTS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
Borrower shall fail or, in the case of any Loan Documents executed by a
Guarantor, such Guarantor shall fail, duly and punctually to observe or perform
any obligation, agreement or other provision contained herein or therein, as the
case may be (other than those provisions referred to in subsection (a), (c) or
(d) of this Section 7.1), and such failure shall continue unremedied or unwaived
for a period of twenty (20) days after the earlier of (i) Agent's giving notice
to
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Borrower of such failure and (ii) the date on which a Responsible Officer of
Borrower has knowledge of such failure.
(f) OTHER DEBT TO LENDERS. Any Defined Default under the terms of
any contract or instrument (other than any of the Loan Documents or any Non-
Recourse Debt) pursuant to which Borrower or any Restricted Entity has incurred
any Debt or other liability to any of the Lenders.
(g) DEFAULT IN OTHER AGREEMENTS. Any Defined Default under the terms
of any contract or instrument pursuant to which Borrower or any Restricted
Entity has incurred any Debt (other than Non-Recourse Debt) to any Person other
than Agent and the Lenders pursuant hereto and the other Loan Documents;
provided, however, that such default could reasonably give rise to a Debt of
Borrower or any Restricted Entity in excess of $1,000,000, individually or in
the aggregate for all such defaulted contracts and instruments combined.
(h) JUDGMENTS.
(a) The filing of a notice of judgment lien against Borrower or
any Restricted Entity; or the recording of any abstract of judgment against
Borrower or any Restricted Entity in any county in which Borrower or any
Restricted Entity has an interest in real property; or the service of a
notice of levy and/or of a writ of attachment or execution, or other like
process, against the assets of Borrower or any Restricted Entity; or the
entry of a judgment against Borrower or any Restricted Entity; provided,
however, that such notices, abstracts, writs, process, judgments, orders or
decrees involve an amount or amounts in excess of $1,000,000, individually
or in the aggregate for all such amounts combined, and the same is not
stayed, vacated, paid, bonded against or discharged within twenty (20)
days, but in no event later than five (5) days prior to the date of any
proposed sale thereunder.
(b) A court of competent jurisdiction enters a final order
providing that (i) any Unrestricted Entity should be substantively
consolidated with Borrower or a Restricted Entity, (ii) the corporate veil
between an Unrestricted Entity and either Borrower or any Restricted Entity
should be pierced or (iii) any Unrestricted Entity is the alter ego of
either Borrower or any Restricted Entity; provided that in each such case,
the Unrestricted Entity has liabilities of $1,000,000 or more.
(i) CHANGE OF CONTROL. A Change of Control shall occur at any time.
(j) BANKRUPTCY OR INSOLVENCY. (i) Borrower or any Significant
Restricted Entity shall become insolvent, or shall suffer or consent to or apply
for the appointment of a receiver, trustee, custodian, liquidator or other
officer with similar powers to take possession of all or a substantial portion
of its property or operate all or a substantial portion of its business or any
of its property, or shall generally fail to pay its debts as they become due, or
Borrower or any
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Significant Restricted Entity shall admit in writing its inability to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; or (ii) Borrower or any Significant Restricted Entity shall file a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time (the "Bankruptcy Code"), or under any state or
federal law granting relief to debtors, whether now or hereafter in effect (or
the board of directors shall adopt any resolution or otherwise authorize action
to approve any of the foregoing); or (iii) any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any Significant Restricted Entity, and
any of the following events occurs: (1) the petition commencing the involuntary
case is not contested by an appropriate proceeding promptly instituted and
diligently prosecuted, (2) the petition commencing the involuntary case is not
stayed or dismissed within sixty (60) days after the petition commencing such
case was filed, (3) Borrower or any such Significant Restricted Entity shall
file an answer admitting the jurisdiction of the court and the material
allegations of any such involuntary petition or (4) Borrower or any such
Significant Restricted Entity shall be adjudicated a bankrupt, or an order for
relief shall be entered by any court of competent jurisdiction under the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors.
(k) DISSOLUTION OR LIQUIDATION. The dissolution or liquidation of
Borrower or any Significant Restricted Entity (other than the liquidation or
dissolution of a Significant Restricted Entity in the ordinary course of
business), or the commencement of an action for the involuntary dissolution of
any such entity which is not contested by an appropriate proceeding promptly
instituted and diligently prosecuted.
(l) ERISA. Any material violation of ERISA, a Termination Event or
any Reportable Event occurs with respect to any Plan or any event or condition
occurs, which violation of ERISA, Termination Event, Reportable Event or event
or condition could, if continued unremedied, subject Borrower or any member of
Borrower's consolidated group to a Tax, penalty or other liability which in the
aggregate could reasonably be expected to have a Material Adverse Effect;
provided that Borrower shall have fifteen (15) days to cure any such ERISA
violation, Termination Event, Reportable Event or event or condition.
"Termination Event" with respect to any Employee Plan means the occurrence of
any of the following events: (i) the institution by the PBGC of proceedings to
terminate an Employee Plan pursuant to Section 4042 of ERISA, (ii) the
occurrence of any event or condition described in Section 4042 of ERISA that
could constitute grounds for the termination of, or the appointment of a trustee
to administer an Employee Plan or (iii) the adoption of an amendment to an
Employee Plan requiring the provision of security to such an Employee Plan
pursuant to Section 307 of ERISA.
(m) TERMINATION OF LOAN DOCUMENTS, ETC. Any of the Loan Documents in
existence on Closing Date, or any material provision in any of them, shall be
declared by a court of competent jurisdiction to have ceased to be in full force
and effect for any reason other than
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a release or termination thereof upon the full payment and satisfaction of the
Obligations (other than Residual Obligations), or Borrower shall so claim or
assert in any writing.
(n) FAILURE TO GIVE NOTICE OF POTENTIAL EVENT OF DEFAULT. Borrower
shall fail to provide Agent with notice of a Responsible Officer of Borrower's
knowledge of a Potential Event of Default promptly (but in no event later than
ten (10) days after such Responsible Officer's knowledge thereof).
(o) LITIGATION. The institution of any litigation or proceeding or
investigation by a Governmental Authority brought against Borrower or any
Restricted Entity, that if Adversely Determined, in the reasonable judgment of
Borrower or the Required Lenders, could reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate, or the occurrence of
any development in any litigation or proceeding or investigation by a
Governmental Authority existing on the Closing Date or in any litigation or
proceeding or investigation by a Governmental Authority subsequently commenced
which, in the reasonable judgment of Borrower or the Required Lenders, either
(i) materially increases the likelihood that such litigation, proceeding or
investigation will be Adversely Determined, if such adverse determination could
reasonably be expected to have a Material Adverse Effect, or (ii) materially
increases the likelihood that, if Adversely Determined, such litigation,
proceeding or investigation could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
SECTION 7.2. REMEDIES. Upon the occurrence of an Event of Default:
(a) AUTOMATIC TERMINATION OF COMMITMENTS. If an Event of Default
occurs under Section 7.1(j) or (k) (insofar as there occurs a liquidation or
dissolution of Borrower), then the Commitments shall automatically and
immediately terminate, and the obligation of each Lender to make any Loan and
the obligation of Issuing Lender to issue any Letter of Credit shall thereupon
terminate; PROVIDED, that the foregoing shall not affect in any way the
obligations of the Lenders to make Revolving Loans to reimburse drawings under
Letters of Credit as provided in Section 2.1(c), to repay Refunded Swing Line
Loans as provided in Section 2.1(b), to purchase participations from the Swing
Line Bank in any unpaid Swing Line Loans as provided in Section 2.1(b), or to
purchase participations from Issuing Lender in the unreimbursed amount of any
drawings under any Letters of Credit as provided in Section 2.1(c).
(b) TERMINATION BY REQUIRED LENDERS. If an Event of Default occurs
and is continuing under Section 7.1 hereof, other than under Section 7.1(j) or
(k) (insofar as there occurs a liquidation or dissolution of Borrower), the
Required Lenders may, by written notice to Borrower, declare that the
Commitments are terminated, whereupon the obligation of each Lender to make any
Loan and the obligation of Issuing Lender to issue any Letter of Credit shall
thereupon terminate; PROVIDED, that the foregoing shall not affect in any way
the obligations of the Lenders to make Revolving Loans to reimburse drawings
under Letters of Credit as provided in Section 2.1(c), to repay Refunded Swing
Line Loans as provided in Section 2.1(b), to purchase participations from the
Swing Line Bank in any unpaid Swing Line Loans as provided in Section
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2.1(b), or to purchase participations from Issuing Lender in the unreimbursed
amount of any drawings under any Letters of Credit as provided in Section
2.1(c).
(c) ENFORCEMENT. Upon the occurrence of any Event of Default and
while such Event of Default is continuing, Agent (acting upon the instruction of
the Required Lenders), without notice to or demand upon Borrower, which are
hereby expressly waived by Borrower, may proceed to protect, exercise and
enforce the rights and remedies of Agent and the Lenders under the Loan
Documents against Borrower and each Guarantor, and such other rights and
remedies as are provided by law or equity.
SECTION 7.3. APPLICATION OF PROCEEDS AFTER EVENT OF DEFAULT AND
ACCELERATION. From and after the date on which all Obligations become due and
payable in accordance with Section 7.1 and Section 7.2 hereof, all amounts
received by Agent or any Lender in connection with the Obligations, whether as a
result of the exercise of remedies or otherwise, shall be applied first to pay
all amounts then due and owing to Agent acting in its capacity as such until
paid in full. Thereafter, so long as any Letter of Credit shall remain
outstanding, any amounts received by Agent shall be held by Agent, pursuant to
such documentation as Agent shall request, as cash collateral for the obligation
of Borrower to reimburse Issuing Lender in the event of any drawing under any
outstanding Letter of Credit, and so much of such funds shall at all times
remain on deposit as cash collateral as aforesaid as shall equal the maximum
amount available at any time for drawing under all Letters of Credit (the
"MAXIMUM AVAILABLE AMOUNT"); PROVIDED that in the event of cancellation or
expiration of any Letter of Credit or any reduction in the Maximum Available
Amount, Agent shall apply the difference between the cash collateral held by
Agent immediately prior to such cancellation, expiration or reduction and the
Maximum Available Amount immediately after such cancellation, expiration or
reduction, and shall immediately apply amounts received in excess of that
required to be held as cash collateral, to pay all amounts then due and owing to
each of the Lenders pursuant to Sections 9.3 and 9.4 hereof, and finally to all
other Obligations then due and owing to the Lenders.
ARTICLE VIII.
AGENT AND THE LENDERS
SECTION 8.1. AUTHORIZATION AND ACTION.
(a) APPOINTMENT OF AGENT. Each Lender hereby irrevocably designates,
appoints and authorizes Agent as its agent hereunder to execute and deliver or
accept, on behalf of each of the Lenders, this Agreement and the other Loan
Documents, and any other documents, instruments and agreements related hereto or
thereto and to take such action on its behalf and to exercise such rights,
remedies, powers and privileges hereunder, to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement and the
other Loan Documents as are delegated to Agent by the terms hereof or thereof,
together with such rights,
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remedies, powers and privileges as are reasonably incidental thereto. Agent may
execute any of its respective duties as agent hereunder by or through
affiliates, officers, directors, agents or employees and shall be entitled to
retain counsel and to act in reliance upon the advice of such counsel concerning
all matters pertaining to the agencies hereby created and its duties hereunder.
(b) ACTIONS OF AGENT. Agent shall not, without the prior approval of
the Required Lenders (or, as specifically provided herein, by all Lenders),
consent to any departure by Borrower from the terms hereof, waive any Potential
Event of Default or Event of Default on the part of Borrower hereunder or on the
part of Borrower or any Guarantor under any of the other Loan Documents to which
it is a party, or amend, modify, supplement or terminate, or agree to any
surrender of, this Agreement, the Notes or any other Loan Documents. As to any
matters not expressly provided for by the Loan Documents (including without
limitation enforcement or collection of the Notes), Agent shall not be required
to exercise any discretion or take any action, and (subject to the provisions of
this Article VIII) shall only be required to act or to refrain from acting upon
the instructions of the Required Lenders. Agent may at any time request such
instructions from the Required Lenders with respect to any actions or approvals
which by the terms of this Agreement or of any of the Loan Documents Agent is
permitted or required to take or to grant, and if such instructions are promptly
requested, Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from any action or withholding any approval under any
of the Loan Documents until it shall have received such instructions from the
Required Lenders, which instructions shall be binding on all Lenders; provided,
however, that Agent shall not in any event be required to take or refrain from
taking any action which would, in Agent's opinion, expose Agent to liability not
specifically indemnified against pursuant to Section 8.5 hereof, be inconsistent
with Agent's practice in similar situations when acting solely for its own
account, or be contrary to the provisions of any Loan Document or to applicable
law. Without limiting the generality of the foregoing, no Lender shall have any
right of action whatsoever against Agent as a result of Agent's acting or
refraining from acting under this Agreement, the Notes or any of the other Loan
Documents in accordance with the instructions of the Required Lenders (or, as
specifically provided herein, by all Lenders), unless arising from Agent's gross
negligence or willful misconduct.
(c) NO ADDITIONAL DUTIES; DEFAULTS. Agent shall not have any duties
or responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. No duty to act, or refrain from acting, and no other
obligation whatsoever, shall be implied on the basis of or imputed in respect of
any right, power or authority granted to Agent or shall become effective in the
event of any temporary or partial exercise of such right, power or authority.
Without limiting the generality of the foregoing, Agent shall have no duty to
exercise any right, power, remedy or privilege granted to it hereby, to
ascertain or inquire whether any Potential Event of Default or Event of Default
has occurred and is continuing, or otherwise to inquire into the performance or
observance on the part of Borrower or any Subsidiary or Partnership of any term,
covenant, condition or agreement on its part to be performed or observed, or to
inspect the property (including the books and records) of Borrower or any
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Subsidiary or Partnership or to take any other affirmative action hereunder,
unless requested or directed to do so by the Required Lenders. Agent shall not
be deemed to have knowledge of the occurrence of an Event of Default or
Potential Event of Default (other than the non-payment of principal of or
interest on the Loans) unless Agent has received notice from a Lender or
Borrower specifying the occurrence of such Event of Default or Potential Event
of Default and stating that such notice is a "Notice of Default". In the event
that Agent receives such a notice of the occurrence of an Event of Default or
Potential Event of Default, Agent shall give prompt notice thereof to the
Lenders (and shall give each Lender prompt notice of each such non-payment).
Agent shall take such action with respect to such Event of Default or Potential
Event of Default as shall be directed by the Required Lenders; provided,
however, that unless and until Agent shall have received such directions, Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Event of Default or Potential Event of Default
as it shall in its sole and absolute discretion deem advisable in the best
interest of the Lenders.
(d) NATURE OF AGENT'S DUTIES. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Agent agrees to
provide each Lender with all credit or other information concerning the affairs,
financial condition or business of Borrower or any Subsidiary or Partnership
received by Agent in connection with this Agreement or any of the other Loan
Documents.
SECTION 8.2. EXCULPATION; AGENT'S RELIANCE; ETC. Neither Agent nor
any of its affiliates, directors, officers, agents, attorneys or employees shall
be liable for any action taken or omitted to be taken by it or them under or in
connection with any Loan Document, except for its or their own gross negligence
or willful misconduct. Without limiting the generality of the foregoing, Agent:
(a) may treat the payee of any Note or the Person in whose name a Loan is
registered, as the case may be, as the holder thereof until Agent receives
written notice of the assignment or transfer thereof in accordance with Section
9.5 hereof signed by such holder and otherwise in form satisfactory to Agent;
(b) may consult legal counsel, independent public accountants and other experts
selected by Agent and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with advice of such counsel, accountants
or experts; (c) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any recitals, statements, warranties or
representations made in, or in connection with, this Agreement or any other Loan
Document or for the due execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any of the
other Loan Documents or any other agreements or any assignments, certificates,
requests, financial statements, projections, notices, schedules or opinions of
counsel executed and delivered pursuant thereto, or for the financial condition
of Borrower, Subsidiaries and Partnerships; and (d) shall incur no liability
under or in respect of any Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable,
telecopier or telex) believed by Agent to be genuine and correct and to have
been signed or sent by the proper Person or Persons.
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SECTION 8.3. WELLS FARGO AND AFFILIATES. With respect to its
Pro Rata Share of the Commitments, the Loans made by it and the Letters of
Credit issued by it, Wells Fargo shall have the same rights and powers under the
Loan Documents as any other Lender and may exercise the same as though it were
not Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include Wells Fargo in its individual capacity. Wells Fargo and its
affiliates may accept deposits from, lend money to, acquire equity interests or
otherwise invest in, act as trustee under trust indentures, and generally engage
in any kind of business with, Borrower and any Person who may do business with
or own securities of Borrower, all as if Wells Fargo were not Agent or a Lender
and without any duty to account therefor to any other Lender.
SECTION 8.4. LENDER CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon Agent or any other Lender and
based on the financial statements referred to in Section 4.6 hereof and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents.
SECTION 8.5. INDEMNIFICATION. Agent shall be fully justified in
failing or refusing to take any action hereunder or under any of the other Loan
Documents or in relation thereto unless it shall first be indemnified (upon
requesting such indemnification) to its satisfaction by the Lenders against any
and all liability and expense which it may incur by reason of taking or
continuing to take any such action. The Lenders further agree to, and hereby
do, indemnify Agent (to the extent not reimbursed by Borrower), according to the
Pro Rata Shares of the Commitment then held by each of them (or any transferee
not assuming the obligations of the transferring Lender hereunder) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent, in any way relating to or arising out of the Loan Documents or any action
taken or omitted by Agent under any Loan Document, provided that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including outside counsel fees
incurred on behalf of the Lenders in connection with the Loan Documents)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings (including proceedings in any bankruptcy court)
or otherwise) of, or legal advice in respect of rights or responsibilities
under, the Loan Documents, or any of them, to the extent that Agent is not
reimbursed for such expenses by Borrower.
SECTION 8.6. SUCCESSOR AGENT. Agent may resign at any time as Agent
(and Swing Line Lender and Issuing lender) under the Loan Documents by giving
thirty (30) days'
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written notice thereof to the Lenders and Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor Agent (and
Swing Line Lender and Issuing Lender) under the Loan Documents. If no successor
Agent shall have been so appointed by the Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving written notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a financial institution, or a branch or agency
of a financial institution, organized or licensed to do business under the laws
of the United States of America or any State thereof and having a combined
capital and surplus of at least Two Billion Dollars ($2,000,000,000). Upon the
acceptance of any appointment as Agent under the Loan Documents by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent (including
those of Swing Line Lender and Issuing Lender), and the retiring Agent shall be
discharged of its future duties and obligations under the Loan Documents. In
such event, Borrower shall prepay any outstanding Swing Line Loans made by the
retiring Agent in its capacity as Swing Line Lender. If any Letters of Credit
are then outstanding, Borrower shall (i) return such Letters of Credit for
cancellation, (ii) cash collateralize such Letters of Credit in a manner
reasonably acceptable to the retiring Agent, (iii) cause the successor Agent to
issue to retiring Agent, backing letters of credit provided that the successor
Agent's creditworthiness is reasonably acceptable to the retiring Agent or (iv)
make other provision therefor that the retiring Agent determines is
satisfactory. Upon any retiring Agent's resignation as Agent under the Loan
Documents, the provisions of this Article VIII will inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
SECTION 8.7. EXCESS PAYMENTS. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Loan or payment of any
Fees or amounts due under Section 9.4 hereof in excess of its Pro Rata Share
thereof and other recoveries obtained by all Lenders, such Lender shall purchase
from the other Lenders such participations in the Loans held by them as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of the other Lenders; provided, however, that if all
or any portion of the excess payment or other recovery is thereafter recovered
from such purchasing Lender, the purchase shall be rescinded and the purchase
price restored to such Lender to the extent of such recovery, but without
interest. Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 8.7 may, to the fullest extent permitted
by law and by Section 9.5(b) hereof, exercise all of its rights of payment
(including set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
SECTION 8.8. BENEFICIARIES. The provisions of this Article VIII are
solely for the benefit of Agent and the Lenders, and Borrower shall not have any
rights to rely on or enforce any of the provisions hereof. In performing its
functions and duties under this Agreement, Agent shall act solely as agent of
the Lenders and does not assume by virtue of this
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Article VIII and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrower.
SECTION 8.9. OBLIGATIONS SEVERAL. Upon syndication of the
Commitments, the obligations of each Lender hereunder are several, and neither
any Lender nor Agent shall be responsible for the obligation of any other Person
hereunder, nor will the failure by Agent or any Lender to perform any of its
obligations hereunder relieve Agent or any other Lender from the performance of
its respective obligations hereunder. Nothing contained in this Agreement, and
no action taken by any Lender or Agent pursuant hereto or in connection herewith
or pursuant to or in connection with the Loans, shall be deemed to constitute
the Lenders, together or with or without Agent, a partnership, association,
joint venture, or other entity.
SECTION 8.10. NO OBLIGATION OF ISSUING LENDER TO OTHER LENDERS WITH
RESPECT TO LETTERS OF CREDIT. In determining whether to pay under any Letter of
Credit, Issuing Lender shall not have any obligation to the other Lenders other
than to confirm that any documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear substantially to
comply on their face with the requirements of such Letter of Credit, as the case
may be. Any action taken or omitted to be taken by Issuing Lender under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for Issuing Lender any
resulting liability to any other Lender.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. NO WAIVER; MODIFICATIONS IN WRITING.
(a) FAILURE OR DELAY; AGENT AND THE REQUIRED LENDERS. No failure,
delay or discontinuance on the part of Agent or any Lender or any other holder
of rights in the Notes, if issued, in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided in this Agreement, in the Notes, if issued, and in the other
Loan Documents are cumulative and are not exclusive of any remedies that may be
available to Agent and the Lenders at law, in equity or otherwise except as
otherwise provided in Section 9.11 hereof. No amendment, modification,
supplement, termination, consent or waiver of this Agreement, the Notes or any
of the other Loan Documents, nor consent to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by Agent
upon its obtaining consent from the Required Lenders; provided that Agent may
make such amendments to, or modifications of, Schedules A and 9.2 as are
necessary to reflect assignments made in accordance with Section 9.5; provided,
further that no amendment, modification or waiver shall be made of Section
5.9(b) unless the same shall be in writing and signed by Agent upon its
obtaining consent
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from Lenders holding Pro Rata Shares equal to or greater than seventy-five
percent (75%); provided, still further, that no amendment, modification,
supplement, termination, waiver or consent, as the case may be, which has the
effect of: (i) reducing the interest rate or principal amount, or extending the
stated maturity or stated due date, of any sum payable by Borrower to any Lender
hereunder or under the Notes, (ii) increasing the amount, or extending the
stated expiration or stated termination date, of any part of the Commitments
hereunder or subjecting any Lender to any additional obligation, (iii) changing
this Section 9.1 or the definition of the term "Required Lenders",
(iv) releasing all or substantially all of any class of Collateral pledged to
secure Borrower's obligations hereunder or under any of the other Loan
Documents, or (v) releasing any Significant Restricted Entity that is a
Guarantor of Borrower's obligations hereunder or terminating any guaranty of
such obligations, except as expressly provided therein, shall be effective
unless the same shall be signed by Agent upon its obtaining written consent from
all of the Lenders; provided still further, that no such amendment,
modification, supplement, termination, waiver or consent, as the case may be,
which has the effect of (w) increasing the duties or obligations of Agent
hereunder, (x) increasing the standard of care or performance required on the
part of Agent hereunder (y) reducing or eliminating the indemnities or
immunities to which Agent is entitled, hereunder (including any amendment or
modification of this Section 9.1), or (z) increasing the duties or obligations
of Swing Line Lender or Issuing Lender hereunder shall be effective unless the
same shall be signed by or on behalf of Agent.
(b) LIMITED WAIVER. Any waiver of any provision of this Agreement or
any of the other Loan Documents shall be effective only in the specific instance
and for the specific purpose for which given. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 9.1
shall be binding upon each Lender, each future Lender and Borrower. Borrower
agrees and acknowledges that it shall not be entitled to rely upon or assert any
purported, implied or oral modification hereof or with respect to any other Loan
Document to which it is a party.
SECTION 9.2. NOTICES. Any notice required or permitted to be given
hereunder shall be given in writing and may be personally served, telecopied or
sent by United States mail and shall be deemed to have been given when delivered
in person, received by telecopy, or four (4) Business Days after deposit in the
United States mail, registered or certified, with postage prepaid and properly
addressed. For the purposes hereof, the addresses of the parties hereto shall,
until further notice given as herein provided, be as follows:
Wells Fargo or Agent: Wells Fargo Bank, National Association Los Angeles
Regional Commercial Banking Office
333 South Grand Avenue, Third Floor
Los Angeles, California 90071
Attention: Cindy Sullivan,
Vice President
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With a copy to: Wells Fargo Bank, National Association Legal Department,
Suite 1040
333 South Grand Avenue
Los Angeles, California 90071
Attention: Commercial Section
With a copy to: Wells Fargo Agency
201 Third Street, 8th Floor
San Francisco, California 94103
Attention: Sorana Soong
Any Lender other At the address set forth opposite each such Lender's name on
than Wells Fargo: SCHEDULE 9.2 hereto.
Borrower: Ticketmaster Group, Inc.
3701 Wilshire Boulevard, 7th Floor
Los Angeles, California 90010
Attention: Fredric D. Rosen, President and Chief
Executive Officer; Peter B. Knepper, Chief Financial
Officer; and Ned S. Goldstein, Vice President and General
Counsel
With a copy to: Charles Evans Gerber, Esq.
Neal Gerber & Eisenberg
2 North LaSalle Street
Chicago, Illinois 60602
SECTION 9.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Irrespective of
whether the transactions contemplated hereby shall be consummated, Borrower
hereby agrees to pay all of the following expenses (the "Lender Expenses")
promptly following demand therefor: (a) the reasonable out-of-pocket costs and
expenses of Agent and the Lenders incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement, the Notes, the other Loan
Documents, and all other agreements, instruments and documents contemplated
hereby and thereby, and any amendments, modifications, restatements or waivers
hereto or thereto; (b) the reasonable fees, expenses and disbursements of
counsel to Agent and the Lenders in connection with the negotiation,
preparation, reproduction, execution and delivery of this Agreement, the Notes,
the other Loan Documents and all other agreements, instruments and documents
contemplated hereby and thereby; (c) filing, recording, publication, search and
title fees paid or incurred by or on behalf of Agent in connection with the
transactions contemplated by and the administration of this Agreement, the
Notes, and the other Loan Documents; (d) the reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees and expenses, including allocated
fees and expenses of in-house counsel of Agent on a real hourly basis) incurred
by Agent and the Lenders to correct any default, to enforce any provision of
this Agreement, any
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of the Notes or any of the other Loan Documents, or any other document or
instrument contemplated hereby or thereby or to prosecute or defend any lawsuit
(whether in pre-trial, trial or appellate proceedings) or administrative
proceeding arising from or relating to this Agreement or the other Loan
Documents, or the transactions or occurrences arising hereunder or thereunder or
relating hereto or thereto (provided that solely with respect to any litigation
between Borrower and Agent and the Lenders arising in connection with actions
described in this clause (d), Agent and the Lenders shall only be entitled to
reimbursement of such costs and expenses to the extent their position has
substantially prevailed in court); and (e) the reasonable out-of-pocket costs
and expenses (including reasonable attorneys' fees and expenses, including
allocated fees and expenses of in-house counsel on a real hourly basis, and the
fees and expenses of other professionals) incurred by Agent or any Lender in
connection with any bankruptcy or other insolvency proceeding, reorganization,
workout, composition or other creditor arrangement of Borrower or any Subsidiary
or Partnership.
SECTION 9.4. INDEMNITY.
(a) INDEMNIFICATION. In addition to the payment of Lender Expenses
pursuant to Section 9.3 hereof, Borrower agrees to indemnify, defend and hold
harmless Agent and the Lenders and the officers, directors, employees and agents
of the Agent and the Lenders (the "Indemnitees") from and against (i) any and
all transfer taxes, documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and delivery of this Agreement
and the other Loan Documents or the making of the Loans (other than income and
franchise taxes imposed upon any Lender by the United States of America or any
political subdivision thereof or by any other country (or any political
subdivision thereof) in which such Lender does business or in which such Lender
has an office), and (ii) any and all liabilities, losses, damages, penalties,
judgments, suits, claims, costs and expenses of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
and other professionals) in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitee shall be designated a party
thereto, which may be imposed on, incurred by or asserted against such
Indemnitee, in any manner relating to or arising out of or in connection with
the making of the Loans, this Agreement and all other Loan Documents or the use
or intended use of the proceeds of the Loans (the "Indemnified Liabilities");
provided, however, that Borrower shall have no obligation hereunder with respect
to any of the Indemnified Liabilities arising from (x) the gross negligence or
willful misconduct of any Indemnitee or (y) any matter which, although arising
out of the making of the Loans and/or the Loan Documents, is in substance a
dispute between or among one or more of the Indemnitees which results in a
judicial action or arbitration proceeding being brought to which Borrower is not
a party (except that Borrower may be a necessary or nominal party or for
purposes of jurisdiction or venue and except if Borrower is dismissed as a party
to such action).
(b) PROCEEDINGS. Each Indemnitee will promptly notify Borrower of
each event of which it has knowledge which may give rise to a claim under the
indemnification provisions of this Section 9.4; provided, however, that the
failure to so notify Borrower shall in no way
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impair Borrower's obligations under this Section 9.4 except to the extent that
material prejudice to Borrower results from such failure. If any investigative,
judicial or administrative proceeding arising from any of the foregoing is
brought against any Indemnitee indemnified or intended to be indemnified
pursuant to this Section 9.4, such Indemnitee, to the extent directed by
Borrower, will resist and defend such action, suit or proceeding or cause the
same to be resisted and defended by counsel designated by the Indemnitee (which
counsel shall be reasonably satisfactory to Borrower). Each Indemnitee will use
its best efforts to cooperate in the defense of any such action, writ or
proceeding. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding provisions may be unenforceable because it
is violative of any law or public policy, Borrower shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(c) SURVIVAL. The obligations of Borrower under this Section 9.4
shall be Residual Obligations.
SECTION 9.5. SUCCESSORS AND ASSIGNMENT AND PARTICIPATIONS.
(a) BINDING UPON SUCCESSORS AND ASSIGNS. This Agreement and any
amendments hereto shall be binding upon and inure to the benefit of and be
enforceable by Borrower and the Lenders and their respective successors and
assigns. Borrower may not assign or transfer any interest hereunder without the
prior written consent of all Lenders.
(b) ASSIGNMENTS OF AND PARTICIPATION IN LOANS.
(i) With the prior written consent of Borrower and Agent (such
consent not to be unreasonably withheld provided the proposed assignment is
consistent with the consultation described below), each Lender may (after having
consulted with Borrower prior to marketing an assignment) assign to one or more
Eligible Assignees all or a portion of its rights and obligations under the Loan
Documents (including, without limitation, all or a portion of its Pro Rata Share
of the Commitment); provided that (x) the amount of the Commitment and Loans of
the assigning Lender being assigned pursuant to each such assignment (determined
as of the date of such assignment) shall in no event be less than the lesser of
(I) $10,000,000 and (II) an amount equal to such assigning Lender's entire Pro
Rata Share of the Commitment and the outstanding Loans, and (y) the parties to
each such assignment shall execute and deliver to Agent, for its acceptance and
recording in the Register, an Assignment and Assumption Agreement, in
substantially the form attached hereto as EXHIBIT 9.5 (an "Assignment
Agreement"), together with a processing and recordation fee of $2,000 and any
documents required by Section 2.10(c)(i). Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment Agreement, (A) the assignee thereunder shall be a party hereto and
have the rights and obligations of a Lender hereunder and (B) the Lender
assignor thereunder shall relinquish its rights and be released from its future
obligations under this Agreement and the other Loan Documents (and such Lender
shall cease to be a party hereto and thereto if it has assigned all of its Pro
Rata Share of the Commitment).
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(ii) By executing and delivering an Assignment Agreement, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (u) such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any other instrument
or document furnished pursuant hereto; (v) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance or observance by any of
Borrower or any Restricted Entity of any of their respective obligations under
any Loan Document or any other instrument or document furnished pursuant hereto;
(w) such assignee confirms that it has received a copy of this Agreement,
together with copies of the latest financial statements referred to in
Section 5.3 hereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment Agreement; (x) such assignee will, independently and without reliance
upon Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents; (y) such assignee appoints and authorizes Agent to take such action
as agent on its behalf and to exercise such powers under the Loan Documents as
are delegated to Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (z) such assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(iii) Upon its receipt of an Assignment Agreement executed by an
assigning Lender, Agent shall (x) accept such Assignment Agreement, (y) record
the information contained therein in the Register and (z) give prompt notice
thereof to Borrower.
(iv) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Pro Rata
Share of the Commitment and the Loans); provided that (x) such Lender's
obligations under this Agreement (including, without limitation, its Pro Rata
Share of the Commitment hereunder) shall remain unchanged, (y) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and Borrower, Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement; provided further, that such Lender
shall retain all rights of approval hereunder, except rights of approval with
respect to amendments, modifications or waivers relating to the interest rates
borne by the Loans, the amount of fees payable hereunder as applicable to a
participant, the amount of the Commitment and the Loans, the maturity dates of
the Loans and the release of all or substantially all guaranties of or security
for the Loans except as required or permitted under this Agreement.
(v) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
subsection, disclose to the assignee or participant or proposed assignee or
participant, any information relating to Borrower or any
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Restricted Entity furnished to such Lender by or on behalf of Borrower; provided
that, prior to any such disclosure, (x) such Lender consults with Borrower
regarding such disclosure and (y) the assignee or participant or proposed
assignee or participant shall agree in writing to preserve the confidentiality
of any confidential information relating to Borrower received by it from such
Lender.
SECTION 9.6. SET-OFF. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of any Event of Default, each Lender and any Person with any
interest in any Loan or Note, if issued, is hereby authorized by Borrower at any
time or from time to time, without notice to Borrower or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all deposits of Borrower (general or special, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including Client Accounts and other trust
accounts) and any other indebtedness at any time held or owing by such Lender or
that subsequent holder to or for the credit or the account of Borrower or
against and on account of the Obligations of Borrower to such Lender or that
subsequent holder under this Agreement and the Notes, if issued, including, but
not limited to, all claims of any nature or description arising out of or
connected with this Agreement, the Loans, the Notes, if issued, or any of the
other Loan Documents, irrespective of whether or not such Lender or other Person
with an interest in any Loan or Note shall have made any demand under this
Agreement; provided that no Person other than a Lender shall be entitled to
rights under this Section 9.6, unless Borrower has received ten days' prior
written notice of its interest in a Loan or Note.
SECTION 9.7. EFFECTIVENESS. Each and every provision of this
Agreement, and all Obligations of Borrower hereunder, shall remain in full force
and effect and enforceable in accordance with their terms (except as
enforceability is limited in accordance with the provisions hereof) until all of
such Obligations (other than Residual Obligations) shall have been paid in full
or otherwise satisfied; provided, however, that at any time when Borrower's only
remaining Obligations hereunder are obligations under Sections 2.9, 2.10 and
9.4, the provisions of Articles IV, V, VI, VII and VIII hereof shall not be
binding upon Borrower, and any breach thereof shall not give rise to a Potential
Event of Default or an Event of Default.
SECTION 9.8. HEADINGS. Article and section headings used in this
Agreement are for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose or affect the construction of this
Agreement.
SECTION 9.9. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement. This Agreement shall become
effective upon the execution of a counterpart hereof by each of the
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parties hereto. At Agent's discretion, Agent may accept facsimile signatures
from any Lender and Borrower.
SECTION 9.10. COMPLETE AGREEMENT. Notwithstanding any provision of
any of the Loan Documents to the contrary, this Agreement, the Notes, the other
Loan Documents and the other instruments and documents executed in connection
herewith and therewith constitute the entire agreement by and among the parties
hereto, and supersede and replace all prior discussions, negotiations, offers,
understandings and agreements including, without limitation, the Existing Credit
Agreement and the "Loan Documents" as defined in the Existing Credit Agreement
(except that such supersession shall be prospective in nature and shall not be
deemed to affect or change the date on which the obligations of Borrower under
the Existing Credit Agreement were created or the date on which the guaranties
and security interests under the existing collateral documents were granted).
There are no other understandings or agreements, and neither Agent nor any
Lender has made any representations or promises, unless specifically set forth
in this Agreement or in the Loan Documents executed in connection herewith.
SECTION 9.11. INTERPRETATION. This Agreement and each of the other
Loan Documents executed in connection herewith shall be construed to liberally
effectuate the rights and remedies of the parties hereto as expressed herein,
and neither such principle of interpretation nor the express language of this
Agreement or any of the other Loan Documents executed in connection herewith
shall be impaired or adversely affected by any prior discussion, form or draft
of this Agreement or any of the instruments and documents executed in connection
herewith. Neither this Agreement nor any of the Loan Documents executed in
connection herewith shall be construed against Agent or any Lender merely
because they were initially drafted by the Lenders' counsel. In the event of
any irreconcilable conflict between any terms of this Agreement and the terms of
any other Loan Documents, the terms of this Agreement shall prevail; provided,
however, that in the event of any irreconcilable conflict between Section 9.18
hereof and a choice of governing law provision in any of the other Loan
Documents, then the choice of governing law provided in such other Loan Document
shall prevail.
SECTION 9.12. NO COURSE OF CONDUCT. At no time shall the prior or
subsequent course of conduct by Borrower, Agent or any Lender directly or
indirectly limit, impair or otherwise adversely affect any of the parties'
rights or remedies in connection with this or any of the instruments and
documents executed in connection herewith, since the parties hereto agree that
this Agreement and the Loan Documents executed in connection herewith shall only
be amended by written instruments executed by the parties, as provided herein.
SECTION 9.13. NO THIRD PARTIES BENEFITED. This Agreement is made and
entered into for the protection and benefit of the parties hereto and their
successors and assigns, and no other Person shall be a direct or indirect
beneficiary of or have any direct or indirect cause of action or claim in
connection with this Agreement or any of the Loan Documents executed in
connection herewith.
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<PAGE>
SECTION 9.14. LIEN ON DEPOSITS AND PROPERTY IN POSSESSION OF ANY
LENDER. As security for the prompt payment and performance of all its
obligations hereunder and under the other Loan Documents, Borrower hereby grants
to Agent and the Lenders and each of them a Lien on and a security interest in
all its right, title and interest in and to any and all deposit accounts now or
hereafter maintained with Agent or any Lender (including, without limitation,
the Payment Account but excluding the Client Accounts and any other trust
accounts) and in and to any and all of its property and the proceeds thereof now
or hereafter in the possession of Agent or any Lender. If an Event of Default
has occurred and is continuing, Agent or any Lender may exercise its rights
under Article 9 of the Uniform Commercial Code and other applicable laws and
apply any funds in any deposit account maintained with it by Borrower and/or any
property of Borrower in its possession against any amount owed to it by Borrower
hereunder and/or under any other Loan Document.
SECTION 9.15. NONLIABILITY OF THE LENDERS. Borrower acknowledges and
agrees that:
(a) INSPECTIONS OF COLLATERAL. Any inspection of Collateral made by
or through Agent or the Lenders is for purposes of administration of the Loans
only and Borrower is not entitled to rely upon the same;
(b) NO REPRESENTATION OR WARRANTY. By accepting or approving
anything required to be observed, performed, fulfilled or given to Agent or the
Lenders pursuant to the Loan Documents, including any certificate, financial
statement, insurance policy or other document, Agent and the Lenders shall not
be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not constitute
a warranty or representation to anyone with respect thereto by Agent or the
Lenders;
(c) RELATIONSHIP OF LENDERS AND BORROWER. The relationship between
Borrower and Agent and the Lenders is, and shall at all times remain, solely
that of a borrower and lender; Agent and the Lenders shall not under any
circumstance be construed to be partners or joint venturers of Borrower or its
affiliates in connection with this Agreement or any of the other Loan Documents;
Agent and the Lenders shall not under any circumstances be deemed to be in a
fiduciary or equivalent relationship with Borrower or any of its affiliates, or
to owe any fiduciary duty to Borrower or any of its affiliates; Agent and the
Lenders do not undertake or assume any responsibility or duty to Borrower or any
of its affiliates to select, review, inspect, supervise, pass judgment upon or
inform Borrower or any of its affiliates of any matter in connection with their
property, any collateral held by Agent or the Lenders or the operations of
Borrower or any of its affiliates; Borrower and its affiliates shall rely
entirely upon their own judgment with respect to such matters; and any review,
inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by Agent or the Lenders in connection with such matters is
solely for the protection of the Lenders and neither Borrower nor any other
Person is entitled to rely thereon; and
80
<PAGE>
(d) NO LIABILITY. Agent and the Lenders shall not be responsible or
liable to any Person for any loss, damage, liability or claim of any kind
relating to injury or death to Persons or damage to property caused by the
actions, inaction or negligence of Borrower and/or its affiliates and Borrower
hereby indemnifies and holds harmless Agent and the Lenders from any loss,
damage, liability or claim.
SECTION 9.16. TIME. Time is of the essence of each and every
provision of this Agreement and each of the other Loan Documents.
SECTION 9.17. SEVERABILITY OF PROVISIONS; INDEPENDENCE OF COVENANTS.
If any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or any remaining provisions of this Agreement.
SECTION 9.18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE
EXTENT THAT AGENT OR ANY OF THE LENDERS HAS GREATER RIGHTS OR REMEDIES UNDER
FEDERAL LAW, WHETHER AS A NATIONAL BANK OR OTHERWISE, IN WHICH CASE SUCH CHOICE
OF CALIFORNIA LAW SHALL NOT BE DEEMED TO DEPRIVE AGENT OR ANY OF THE LENDERS OF
SUCH RIGHTS AND REMEDIES AS MAY BE AVAILABLE UNDER FEDERAL LAW.
SECTION 9.19. JURISDICTION AND VENUE. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT, THE NOTES, IF ISSUED, OR THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION
OF AGENT AND TO THE EXTENT REQUIRED WITH RESPECT TO PARTICULAR ITEMS OF
COLLATERAL IN ORDER TO ALLOW AGENT OR THE LENDERS TO EXERCISE ITS OR THEIR
REMEDIES WITH RESPECT THERETO, IN ANY OTHER COURT WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY AS A RESULT OF COLLATERAL BEING
LOCATED IN SUCH JURISDICTION. BORROWER, THE LENDERS AND AGENT, TO THE EXTENT
THEY MAY LEGALLY DO SO, HEREBY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 9.19 AND STIPULATE THAT
THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER SUCH PARTY FOR THE
PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT, THE NOTES, OR THE OTHER LOAN DOCUMENTS. TO THE
EXTENT
81
<PAGE>
PERMITTED BY LAW, SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY
ACTION AGAINST BORROWER MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN SECTION 9.2 HERETO. BORROWER AND
EACH OF THE LENDERS AGREES THAT ANY FINAL JUDGMENT RENDERED AGAINST IT IN ANY
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL
JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER PROVIDED BY
LAW.
SECTION 9.20. WAIVER OF TRIAL BY JURY. BORROWER, THE LENDERS AND
AGENT, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING
ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, THE NOTES, OR THE OTHER LOAN
DOCUMENTS TO WHICH THEY ARE PARTIES, OR IN ANY WAY CONNECTED WITH, OR RELATED
TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS
AGREEMENT, THE NOTES, OR THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.
BORROWER, THE LENDERS AND AGENT, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY
AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL
BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9.20 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR
THEIR RIGHT TO TRIAL BY JURY.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
TICKETMASTER GROUP, INC., an WELLS FARGO BANK,
Illinois corporation NATIONAL ASSOCIATION, as
Agent and in its capacity as
a Lender
By:_________________________ By:______________________
Fredric Rosen Cindy Sullivan
Title: President and Chief Title: Vice President
Executive Officer
83
<PAGE>
SCHEDULE A
On the Closing Date, the only Lender shall be Wells Fargo Bank,
National Association.
84
<PAGE>
Schedule 4.7
to
Credit Agreement
NONE
<PAGE>
TICKETMASTER GROUP, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated
as of January 6, 1995 and entered into by and among Ticketmaster Group, Inc., an
Illinois corporation ("COMPANY"), the financial institutions listed on the
signature pages hereof ("LENDERS") and Wells Fargo Bank, National Association,
as agent for Lenders ("AGENT"), and, for purposes of Section 6 hereof, the
Credit Support Parties (as defined in Section 6 hereof) listed on the signature
pages hereof, and is made with reference to that certain Credit Agreement dated
as of November 18, 1994 (the "CREDIT AGREEMENT"), by and among Company, the
Lenders named therein (the "Existing Lender") and Agent. Capitalized terms used
herein without definition shall have the same meanings herein as set forth in
the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement to
(i) add as a Lender under the Credit Agreement the financial institution
identified on the signature pages of this Amendment as a "New Lender", (ii)
adjust certain of the covenants set forth therein, and (iii) make certain other
modifications as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING
TO DEFINED TERMS
A. Subsection 1.2 of the Credit Agreement is hereby amended by deleting
clause (ii) of the definition "ADJUSTED LEVERAGE RATIO" and substituting the
following therefor:
"(ii) cash dividends received by Borrower and any Restricted Entity and
cash dividends declared for the benefit of Borrower or any Restricted
Entity provided that any such declared dividends are received prior to the
date upon which Borrower delivers financial statements pursuant to Section
5.3(b) for such fiscal quarter"
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<PAGE>
B. Subsection 1.26 of the Credit Agreement is hereby deleted and the
following substituted therefor:
"Section 1.26. 'EARNINGS' means, with respect to any Person, net income
from continuing operations for such Person and its consolidated
Subsidiaries as presented in its financial statements prepared in
accordance with GAAP."
C. Subsection 1.27 of the Credit Agreement is hereby deleted and the
following substituted therefor:
"Section 1.27. 'EBITDA' means, with respect any Person as of any date of
determination, Earnings plus (without duplication) (i) total interest
expense, (i) provisions for taxes based on income, (iii) total depreciation
expense, (iv) total amortization expense of such Person and its
consolidated Subsidiaries and (v) minority interests, plus any non-
recurring and non-ordinary losses and losses from asset sales less any
non-recurring and non-ordinary gains and gains from asset sales, (to the
extent any such losses or gains exceed in the aggregate $500,000), all
as determined for the prior twelve (12) month period ending on such date
of determination. Notwithstanding the foregoing, Borrower's direct and
indirect equity interests in Earnings of Unrestricted Entities shall be
excluded (to the extent that such interests would otherwise be included)
in determining EBITDA for Borrower."
1.2 AMENDMENT TO SECTION 5: COMPANY'S AFFIRMATIVE COVENANTS
Section 5 of the Credit Agreement is hereby amended by deleting subsection
5.9(d) and substituting the following therefor:
"(d) MINIMUM EBITDA. The EBITDA of Borrower shall not be less than (i)
$34,000,000 for the Borrower's Fiscal Year ending on January 31, 1995 and
(ii) $36,000,000 for any Fiscal Year of the Borrower ending thereafter."
1.3 AMENDMENT OF SCHEDULES
A. SCHEDULE A: LENDERS. SCHEDULE A to the Credit Agreement is
hereby amended by deleting said SCHEDULE A in its entirety and substituting in
place thereof a new SCHEDULE A in the form of ANNEX A to this Amendment.
B. SCHEDULE 9.2: LENDERS' NOTICE ADDRESS. Schedule 9.2: Lenders'
Notice Address shall be added to the Credit Agreement in the form of ANNEX B to
this Amendment.
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<PAGE>
1.4 MODIFICATION OF EXHIBIT
EXHIBIT 5.3(b): FORM OF COMPLIANCE CERTIFICATE. EXHIBIT 5.3(b) to
the Credit Agreement is hereby amended by deleting Section D "Minimum EBITDA" of
Attachment No. 1 thereto and substituting therefor the following:
"D. MINIMUM FISCAL YEAR EBITDA (as of , l9 ).
------------- --
1. Earnings of Borrower for
the Fiscal Year: $
----------
2. Total interest expense: $
----------
3. Provision for taxes based on
income: $
----------
4. Total depreciation expense: $
----------
5. Total amortization expense: $
----------
6. Minority interests: $
----------
7. Non-recurring and non-ordinary
losses, losses from asset sales
in excess of $500,000: $
----------
8. Non-recurring and non-ordinary
gains, gains from asset sales
in excess of $500,000: $
----------
9. Equity interest in Earnings of Unrestricted
Entities (to the extent included above): $
----------
10. EBITDA (1+2+3+4+5+6+7-(8+9)): $
----------
11. Minimum EBITDA required under
subsection 5.9(d):
(a) Fiscal Year ended 1/31/95 $34,000,000
(b) Fiscal Years ending thereafter $36,000,000"
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<PAGE>
SECTION 2. ADDITIONAL NOTES
Company agrees to execute and deliver to Agent for each Lender a
Revolving Loan Note and a Term Loan Note in the amount of each such Lender's
Revolving Loan Commitment and Term Loan Commitment (after giving effect to the
assignments by Existing Lender to New Lender) (each an "ADDITIONAL NOTE" and
collectively the "ADDITIONAL NOTES"), in the form of Exhibit 1.65A and 1.65B,
respectively, to the Credit Agreement. Each of the parties hereto hereby
acknowledges and agrees that each Additional Note is a Note for all purposes
under the Credit Agreement and the other Loan Documents and that the loans
evidenced by the Additional Notes shall constitute Loans for all purposes under
the Credit Agreement and the other Loan Documents.
SECTION 3. ADDITION OF LENDERS; NOTICE ADDRESSES
The Credit Agreement is hereby amended to include the New Lender as a
Lender for all purposes and as such shall hereby become vested with all the
rights, powers, privileges and duties of a Lender under the Credit Agreement and
each of the other Loan Documents. For purposes of the Credit Agreement, the
address of the New Lender shall be as set forth on SCHEDULE 9.2 in the form of
ANNEX B to this Amendment.
SECTION 4. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "FIRST AMENDMENT EFFECTIVE DATE"):
A. On or before the First Amendment Effective Date, Company shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the First Amendment Effective Date:
1. Resolutions of its Board of Directors approving and
authorizing the execution, delivery, and performance of this Amendment and
approving and authorizing the execution, delivery and payment of the
Additional Notes, certified as of the First Amendment Effective Date by its
corporate secretary or an assistant secretary as being in full force and
effect without modification or amendment;
2. Signature and incumbency certificates of its officers
executing this Amendment and the Additional Notes; and
3. Executed copies of this Amendment and the Additional Notes.
B. On or before the First Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with the transactions
contemplated
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<PAGE>
hereby and all documents incidental thereto not previously found acceptable by
Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Agent and such counsel, and Agent and such counsel shall
have received all such counterpart originals or certified copies of such
documents as Agent may reasonably request.
C. On or before the First Amendment Effective Date, Agent shall have
received from Existing Lender and the New Lender an executed copy of this
Amendment.
D. Promptly after the First Amendment Effective Date, Existing
Lender shall return to Company the Notes delivered on the Closing Date marked
"Cancelled".
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite
corporate power and authority to enter into this Amendment, to issue the
Additional Notes and to carry out the transactions contemplated by, and perform
its obligations under, the Credit Agreement as amended by this Amendment (the
"AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the issuance, delivery and payment of the Additional Notes have
been duly authorized by all necessary corporate action on the part of Company
and the Credit Support Parties, as the case may be.
C. NO CONFLICT. The execution, delivery and performance by each of
Borrower and Guarantors of this Amendment and, in the case of Borrower, the
Additional Notes do not violate any provision of any law or regulation
applicable to such Person the violation of which could reasonably be expected to
have a Material Adverse Effect, or contravene any provision of such Person's
articles of incorporation or by-laws, or result in or constitute a Defined
Default under any contract, obligation, indenture or other instrument to which
such Person is a party or by which such Person may be bound which default could
reasonably be expected to have a Material Adverse Effect.
D. GOVERNMENTAL CONSENTS. No Governmental Approval is required in
connection with the execution, delivery and performance by Borrower or any
Guarantor of this Amendment or the Additional Notes, the performance by Borrower
of the Amended Agreement or the performance by Borrower or any Guarantor of the
transactions contemplated hereby or thereby or to ensure the legality, validity
or enforceability hereof or thereof.
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<PAGE>
E. BINDING OBLIGATION. This Amendment and the Amended Agreement
have been duly executed and delivered by Company and are, and the Additional
Notes, when executed and delivered, will be the legally valid and binding
obligations of Company, enforceable against Company in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
SECTION 6. ACKNOWLEDGEMENT AND CONSENT
Each Guarantor is a party to the Guaranty and, in the case of certain
Guarantors, the Guarantor Pledge Agreement pursuant to which each Guarantor has
guarantied the Obligations on the terms (and to the extent) set forth in the
Guaranty and certain Guarantors have created Liens in favor of Agent on certain
Collateral to secure the Obligations on the terms (and to the extent) set forth
in the Guarantor Pledge Agreement. The Third Party Pledgor has created a Lien
on certain Collateral to secure the Obligations pursuant to (and to the extent
set forth in) the Third Party Pledge Agreement. The Guarantors and the Third
Party Pledgor are collectively referred to herein as the "CREDIT SUPPORT
PARTIES", and the Guaranty, the Guarantor Pledge Agreement and the Third Party
Pledge Agreement are collectively referred to herein as the "CREDIT SUPPORT
DOCUMENTS".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible in accordance with the applicable provisions of the Credit Support
Documents the payment and performance of all guarantied or secured obligations.
Without limiting the generality of the foregoing, each Credit Support Party
hereby acknowledges and confirms the understanding and intent of such party
that, upon the effectiveness of this Amendment, and as a result thereof, the
definition of "Obligations" contained in the Amended Agreement includes the
obligations of Company under the Additional Notes.
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<PAGE>
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Credit Support Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the First Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
Each Credit Support Party acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Amendment,
such Credit Support Party is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of such Credit Support Party to any future amendments to the Credit Agreement.
SECTION 7. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the First Amendment Effective Date, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 9.3 of the Credit Agreement incurred by
Agent and its
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<PAGE>
counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
TICKETMASTER GROUP, INC.,
AN ILLINOIS CORPORATION
By:
-------------------------------
Title:
----------------------------
CREDIT SUPPORT PARTIES:
TICKETMASTER CORPORATION,
AN ILLINOIS CORPORATION
By:
---------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-SOUTHERN
CALIFORNIA, INC., A CALIFORNIA
CORPORATION
By:
---------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-ARIZONA, INC., AN
ARIZONA CORPORATION
By:
----------------------------
Peter B. Knepper
Its: Chief Financial Officer
S-1
<PAGE>
and Treasurer
TICKETMASTER CORPORATION OF
WASHINGTON, A WASHINGTON
CORPORATION
By:
----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-COLORADO, INC., A
COLORADO CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-INDIANA, INC., AN
INDIANA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-GEORGIA, INC., A
GEORGIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-2
<PAGE>
TICKETMASTER-CHICAGO, INC., AN
ILLINOIS CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-PITTSBURGH, INC., A
PENNSYLVANIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-MIDWEST, INC., A
MINNESOTA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-MID ATLANTIC, INC.
A VIRGINIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-3
<PAGE>
TICKETMASTER ADVERTISING COMPANY, AN
ILLINOIS CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TMC CONSULTANTS, INC., AN
ILLINOIS CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-TENNESSEE, INC., A
TENNESSEE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-LAS VEGAS, INC., A
NEVADA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-4
<PAGE>
TICKETMASTER-WISCONSIN, INC., A
WISCONSIN CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TMNY HOLDINGS, INC., A NEW YORK
CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-NEW YORK, INC., A
DELAWARE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-MICHIGAN, INC., A
MICHIGAN CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-5
<PAGE>
TICKETMASTER FLORIDA
MANAGEMENT CORPORATION, A
FLORIDA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER EUROPE, INC.,
A DELAWARE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-TEXAS MANAGEMENT
CORPORATION, A DELAWARE
CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
ENTERTAINMENT STRATEGIES, LTD.,
A CALIFORNIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-6
<PAGE>
TICKETMASTER MASSACHUSETTS,
INC., A MASSACHUSETTS
CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER CINEMA GROUP, LTD.,
A DELAWARE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
PAUL ALLEN
-------------------------------
EXISTING LENDER:
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
INDIVIDUALLY AS EXISTING
LENDER AND AS AGENT
By:
--------------------------------
Title:
-----------------------------
S-7
<PAGE>
NEW LENDER:
U.S. BANK OF WASHINGTON, N.A., AS A LENDER
By:
-------------------------------
Title:
----------------------------
S-8
<PAGE>
ANNEX A
RESTATEMENT OF SCHEDULE A
SCHEDULE A
LENDERS AND PRO RATA SHARES
LENDER PRO RATA SHARE
Wells Fargo Bank, N.A. 91.42857143%
U.S. Bank of Washington, N.A. 8.57142857%
A-1
<PAGE>
ANNEX B
SCHEDULE 9.2
NOTICE ADDRESSES FOR
LENDERS (OTHER THAN WELLS FARGO)
U.S. Bank of Washington, N.A.
10800 NE 8th Street
Suite 1000
Bellevue, WA 98004
(206) 450-6918
Attention: Ann Caldwell
B-1
<PAGE>
TICKETMASTER GROUP, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated
as of January 30, 1995 and entered into by and among Ticketmaster Group, Inc.,
an Illinois corporation ("BORROWER"), the financial institutions listed on the
signature pages hereof ("LENDERS") and Wells Fargo Bank, National Association,
as agent for Lenders ("AGENT"), and, for purposes of Section 6 hereof, the
Credit Support Parties (as defined in Section 6 hereof) listed on the signature
pages hereof, and is made with reference to that certain Credit Agreement dated
as of November 18, 1994, as amended by that certain First Amendment to Credit
Agreement dated as of January 6, 1995 (as so amended, the "CREDIT AGREEMENT"),
by and among Borrower, the Lenders named therein (the "Existing Lenders") and
Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Borrower and Lenders desire to amend the Credit Agreement to
(i) add as Lenders under the Credit Agreement the financial institutions
identified on the signature pages of this Amendment as "New Lenders", (ii)
adjust certain of the covenants set forth therein, and (iii) make certain other
modifications as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING
TO DEFINED TERMS
A. Section 1.2 of the Credit Agreement is hereby deleted and the
following substituted therefor:
SECTION 1.2. "ADJUSTED LEVERAGE RATIO" means, as of the end of each
fiscal quarter of each Fiscal Year, the ratio of (a) all Debt for borrowed
money and reimbursement obligations for letters of credit of Borrower and
its Restricted Entities other than the Term Loans to the extent the Term
Loans are secured as required by Section 2.15(b) to (b) (i) EBITDA of
Borrower and Restricted Entities, PLUS (ii) cash dividends received by
Borrower and any Restricted Entity and cash dividends declared for the
benefit of Borrower or any Restricted Entity provided that any such
declared dividends are received prior to the date upon which Borrower
delivers financial statements pursuant to Section 5.3(b) for such fiscal
quarter, MINUS
-1-
<PAGE>
(iii) distributions made by Borrower or any Restricted Entity to minority
shareholders MINUS (iv) EBITDA generated by any assets or operations sold
by Borrower or any Restricted Entity during such period ("CASH FLOW") up to
and including the date of sale (all as shown on the financial statements of
Borrower and Restricted Entities required to be delivered pursuant to
Section 5.3(b) hereof).
B. Section 1.8 of the Credit Agreement is hereby amended by deleting
the phrase reading "plus the Applicable Margin" from such section.
C. Section 1.42 of the Credit Agreement is hereby amended by deleting
the phrase reading "Ticketmaster-New Orleans, Inc. and" from such section.
D. Section 1.53 of the Credit Agreement is hereby amended by deleting
the phrase reading "plus the Applicable Margin" from such section.
E. Section 1.58 of the Credit Agreement is hereby amended by deleting
the reference to "Section 1.20" therefrom and substituting therefor reference to
"Section 1.23."
F. Section 2.14 of the Credit Agreement is hereby amended by
deleting the word "be" therefrom and substituting therefor the phrase reading
"survive the termination of this Agreement as."
G. Subsection (b) of Section 2.8 of the Credit Agreement is hereby
amended by deleting the parenthetical clause reading "(the entire amount of such
proceeds being `IPO Proceeds')" and substituting therefor a parenthetical clause
reading "(the entire amount of the net cash proceeds for any such issuance of
equity securities, regardless of whether the preceding enterprise valuation or
net cash proceeds thresholds are satisfied, being `IPO Proceeds')."
H. Section 4.6 of the Credit Agreement is hereby amended by inserting
the following sentence as the second sentence thereof:
Such unaudited financial statements were prepared in accordance with
GAAP and present fairly the financial condition of Borrower and its
Subsidiaries, subject, however, to normal year-end adjustments.
I. Section 6.4 of the Credit Agreement is hereby amended by deleting
the word "and" immediately preceding clause (g) thereof and substituting
therefor a comma (,) and by adding the following clause (h) at the end thereof:
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<PAGE>
, and (h) purchase money debt, in an aggregate outstanding principal
amount not exceeding $1,000,000 at any time, secured by Liens
permitted under Section 6.5(f).
J. Section 6.12 of the Credit Agreement is hereby amended by deleting
the proviso from the second sentence of the last paragraph thereof and
substituting therefor the following proviso:
provided that after making such acquisition or investment (i) the
creditors of such Person shall not have direct or indirect recourse of
any kind whatsoever to the assets or revenues of the Borrower or any
Restricted Entity except as a result of bona fide intercompany
transactions in the ordinary course of business permitted by Section
6.15B through 6.15I or Contingent Obligations permitted by Section 6.7
(i.e. such Person shall be bankruptcy remote from Borrower and each
Restricted Entity) and (ii) the provisions of Section 6.8(k), if
applicable, are satisfied.
K. Section 7.1(m) of the Credit Agreement is hereby deleted and the
following substituted therefor:
(m) TERMINATION OF LOAN DOCUMENTS, ETC. Any of the Loan
Documents in existence on the Closing Date, or any Guaranty or
Trademark Mortgage and Assignment Agreement executed and delivered
after the Closing Date (but only following the execution and delivery
thereof), or any material provision in any of them, shall be declared
by a court of competent jurisdiction to have ceased to be in full
force and effect for any reason other than a release or termination
thereof upon the full payment and satisfaction of the Obligations
(other than Residual Obligations), or Borrower or any Guarantor shall
so claim or assert in any writing, or any Guarantor shall seek to
revoke the Guaranty to which it is a party, or any Pledge Agreement or
Trademark Mortgage and Assignment Agreement (after the execution and
delivery thereof) shall fail for any reason to create a security
interest in any Collateral purported to be encumbered thereby or any
such security interest shall fail to be perfected except to the extent
such nonperfection results from the Agent's gross negligence or
willful misconduct.
L. Section 9.1(a) of the Credit Agreement is hereby amended by
inserting at the end of clause (iv) thereof (immediately following the word
"Documents") a parenthetical clause reading "(it being agreed and understood, in
any event, that the consent of all Lenders shall be required for any release of
Collateral that would cause the aggregate fair market value of the Collateral
released after the Closing Date (valued as of the applicable release dates) to
exceed 20% of the fair market value of the Collateral then securing Borrower's
obligations hereunder, such fair market values being reasonably determined by
Borrower's board of directors in good faith)."
-3-
<PAGE>
M. Section 9.4(c) of the Credit Agreement is hereby amended by
deleting the word "be" therefrom and substituting therefor the phrase reading
"survive the termination of this Agreement as."
1.3 AMENDMENT OF SCHEDULES
A. SCHEDULE A: LENDERS. SCHEDULE A to the Credit Agreement is
hereby amended by deleting said SCHEDULE A in its entirety and substituting in
place thereof a new SCHEDULE A in the form of ANNEX A to this Amendment.
B. SCHEDULE 9.2: LENDERS' NOTICE ADDRESS. SCHEDULE 9.2 to the
Credit Agreement is hereby amended by deleting said SCHEDULE 9.2 in its entirety
and substituting in place thereof a new SCHEDULE 9.2 in the form of ANNEX B to
this Amendment.
1.4 MODIFICATION OF EXHIBIT
EXHIBIT 5.3(b): FORM OF COMPLIANCE CERTIFICATE. EXHIBIT 5.3(b) to
the Credit Agreement is hereby amended by deleting Attachment No. 1 therefrom in
its entirety and substituting therefor Attachment No. 1 in the form of ANNEX C
to this Amendment.
SECTION 2. ADDITIONAL NOTES
Borrower agrees to execute and deliver to Agent for Wells Fargo Bank,
National Association and each New Lender a Revolving Loan Note and a Term Loan
Note in the amount of such Lender's Revolving Loan Commitment and Term Loan
Commitment (after giving effect to the assignments by Wells Fargo Bank, National
Association to the New Lenders) (each an "ADDITIONAL NOTE" and collectively the
"ADDITIONAL NOTES"), in the form of Exhibit 1.65A and 1.65B, respectively, to
the Credit Agreement. Each of the parties hereto hereby acknowledges and agrees
that each Additional Note is a Note for all purposes under the Credit Agreement
and the other Loan Documents and that the loans evidenced by the Additional
Notes shall constitute Loans for all purposes under the Credit Agreement and the
other Loan Documents.
SECTION 3. ADDITION OF LENDERS; NOTICE ADDRESSES
The Credit Agreement is hereby amended to include each New Lender as a
Lender for all purposes and, as such, each New Lender shall hereby become vested
with all the rights, powers, privileges and duties of a Lender under the Credit
Agreement and each of the other Loan Documents. For purposes of the Credit
Agreement, the address of the New Lenders shall be as set forth on SCHEDULE 9.2
in the form of ANNEX B to this Amendment.
-4-
<PAGE>
SECTION 4. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "SECOND AMENDMENT EFFECTIVE DATE"):
A. On or before the Second Amendment Effective Date, Borrower shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the Second Amendment Effective Date:
1. Resolutions of its Board of Directors approving and
authorizing the execution, delivery, and performance of this Amendment and
approving and authorizing the execution, delivery and payment of the
Additional Notes, certified as of the Second Amendment Effective Date by
its corporate secretary or an assistant secretary as being in full force
and effect without modification or amendment;
2. Signature and incumbency certificates of its officers
executing this Amendment and the Additional Notes; and
3. Executed copies of this Amendment and the Additional Notes.
B. On or before the Second Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Agent and such counsel, and Agent and such
counsel shall have received all such counterpart originals or certified copies
of such documents as Agent may reasonably request.
C. On or before the Second Amendment Effective Date, Agent shall
have received from each Existing Lender and each New Lender an executed copy of
this Amendment.
D. On or before the Second Amendment Effective Date, the Lenders
shall have received a letter from Neal Gerber & Eisenberg, counsel to Borrower,
authorizing each Lender to rely on the opinion of such counsel delivered in
connection with the closing of the Credit Agreement as if such opinion were
addressed to each such Lender as of the date of such opinion.
E. Promptly after the Second Amendment Effective Date, Wells Fargo
Bank, National Association shall return to Borrower the Notes heretofore
delivered to such Lender marked "Cancelled".
-5-
<PAGE>
SECTION 5. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Borrower has all requisite
corporate power and authority to enter into this Amendment, to issue the
Additional Notes and to carry out the transactions contemplated by, and perform
its obligations under, the Credit Agreement as amended by this Amendment (the
"AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the issuance, delivery and payment of the Additional Notes have
been duly authorized by all necessary corporate action on the part of Borrower
and the Credit Support Parties, as the case may be.
C. NO CONFLICT. The execution, delivery and performance by each of
Borrower and Guarantors of this Amendment and, in the case of Borrower, the
Additional Notes do not violate any provision of any law or regulation
applicable to such Person the violation of which could reasonably be expected to
have a Material Adverse Effect, or contravene any provision of such Person's
articles of incorporation or by-laws, or result in or constitute a Defined
Default under any contract, obligation, indenture or other instrument to which
such Person is a party or by which such Person may be bound which default could
reasonably be expected to have a Material Adverse Effect.
D. GOVERNMENTAL CONSENTS. No Governmental Approval is required in
connection with the execution, delivery and performance by Borrower or any
Guarantor of this Amendment or the Additional Notes, the performance by Borrower
of the Amended Agreement or the performance by Borrower or any Guarantor of the
transactions contemplated hereby or thereby or to ensure the legality, validity
or enforceability hereof or thereof.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement
have been duly executed and delivered by Borrower and are, and the Additional
Notes, when executed and delivered, will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Second Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
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<PAGE>
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
SECTION 6. ACKNOWLEDGEMENT AND CONSENT
Each Guarantor is a party to the Guaranty and, in the case of certain
Guarantors, the Guarantor Pledge Agreement pursuant to which each Guarantor has
guarantied the Obligations on the terms (and to the extent) set forth in the
Guaranty and certain Guarantors have created Liens in favor of Agent on certain
Collateral to secure the Obligations on the terms (and to the extent) set forth
in the Guarantor Pledge Agreement. The Third Party Pledgor has created a Lien
on certain Collateral to secure the Obligations pursuant to (and to the extent
set forth in) the Third Party Pledge Agreement. The Guarantors and the Third
Party Pledgor are collectively referred to herein as the "CREDIT SUPPORT
PARTIES", and the Guaranty, the Guarantor Pledge Agreement and the Third Party
Pledge Agreement are collectively referred to herein as the "CREDIT SUPPORT
DOCUMENTS".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible in accordance with the applicable provisions of the Credit Support
Documents the payment and performance of all guarantied or secured obligations.
Without limiting the generality of the foregoing, each Credit Support Party
hereby acknowledges and confirms the understanding and intent of such party
that, upon the effectiveness of this Amendment, and as a result thereof, the
definition of "Obligations" contained in the Amended Agreement includes the
obligations of Borrower under the Additional Notes.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Credit Support Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the Second Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
Each Credit Support Party acknowledges and agrees that
(i) notwithstanding the conditions to effectiveness set forth in this Amendment,
such Credit Support Party is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and
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<PAGE>
(ii) nothing in the Credit Agreement, this Amendment or any other Loan Document
shall be deemed to require the consent of such Credit Support Party to any
future amendments to the Credit Agreement.
SECTION 7. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Second Amendment Effective Date, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Borrower acknowledges that all costs, fees
and expenses as described in subsection 9.3 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Borrower.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
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<PAGE>
[remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
TICKETMASTER GROUP, INC.,
AN ILLINOIS CORPORATION
By:
-------------------------------
Title:
----------------------------
CREDIT SUPPORT PARTIES:
TICKETMASTER CORPORATION,
AN ILLINOIS CORPORATION
By:
---------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-SOUTHERN
CALIFORNIA, INC., A CALIFORNIA
CORPORATION
By:
---------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-ARIZONA, INC., AN
ARIZONA CORPORATION
By:
----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-1
<PAGE>
TICKETMASTER CORPORATION OF
WASHINGTON, A WASHINGTON
CORPORATION
By:
----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-COLORADO, INC., A
COLORADO CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-INDIANA, INC., AN
INDIANA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-GEORGIA, INC., A
GEORGIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-2
<PAGE>
TICKETMASTER-CHICAGO, INC., AN
ILLINOIS CORPORATION
By:
---------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-PITTSBURGH, INC., A
PENNSYLVANIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-MIDWEST, INC., A
MINNESOTA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-MID ATLANTIC, INC.
A VIRGINIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-3
<PAGE>
TICKETMASTER ADVERTISING COMPANY, AN ILLINOIS
CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TMC CONSULTANTS, INC., AN
ILLINOIS CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-TENNESSEE, INC., A
TENNESSEE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-LAS VEGAS, INC., A
NEVADA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-4
<PAGE>
TICKETMASTER-WISCONSIN, INC., A
WISCONSIN CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TMNY HOLDINGS, INC., A NEW YORK
CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-NEW YORK, INC., A
DELAWARE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-MICHIGAN, INC., A
MICHIGAN CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-5
<PAGE>
TICKETMASTER FLORIDA MANAGEMENT CORPORATION, A
FLORIDA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER EUROPE, INC.,
A DELAWARE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-TEXAS MANAGEMENT
CORPORATION, A DELAWARE
CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
ENTERTAINMENT STRATEGIES, LTD.,
A CALIFORNIA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-6
<PAGE>
TICKETMASTER MASSACHUSETTS,
INC., A MASSACHUSETTS
CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER-NEW ORLEANS, INC.,
A LOUISIANA CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
TICKETMASTER CORPORATION,
A DELAWARE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
PAUL ALLEN
-------------------------------
S-7
<PAGE>
EXISTING LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
INDIVIDUALLY AS EXISTING LENDER AND AS AGENT
By:
--------------------------------
Title:
-----------------------------
U.S. BANK OF WASHINGTON, N.A., AS A LENDER
By:
-------------------------------
Title:
----------------------------
BANQUE NATIONALE DE PARIS, AS A LENDER
By:
-------------------------------
Title:
----------------------------
NEW LENDERS:
FIRST BANK NATIONAL ASSOCIATION, AS A LENDER
By:
-------------------------------
Title:
----------------------------
S-8
<PAGE>
BANQUE PARIBAS, AS A LENDER
By:
-------------------------------
Title:
----------------------------
S-9
<PAGE>
ANNEX A
RESTATEMENT OF SCHEDULE A
SCHEDULE A
LENDERS AND PRO RATA SHARES
LENDER PRO RATA SHARE
Wells Fargo Bank, N.A. 63.42857143%
First Bank National Association 14.28571429%
U.S. Bank of Washington, N.A. 8.57142857%
Banque Paribas 8.57142857%
Banque Nationale de Paris 5.14285714%
A-1
<PAGE>
ANNEX B
SCHEDULE 9.2
NOTICE ADDRESSES FOR
LENDERS (OTHER THAN WELLS FARGO)
U.S. Bank of Washington, N.A.
10800 NE 8th Street
Suite 1000
Bellevue, WA 98004
(206) 450-5918
FAX: (206) 450-5989
Attention: Ann Caldwell
First Bank National Association
601 Second Avenue
Minneapolis, MN 55402-4302
(612) 973-1819
FAX: (612) 973-0824
Attention: Robert W. Miller
Banque Paribas
2029 Century Park East
Suite 3900
Los Angeles, CA 90067
(310) 551-7352
FAX: (310) 556-8759
Attention: Linda Aleshire
Banque Nationale de Paris
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
(213) 488-9120
FAX: (213) 488-9602
Attention: Janice Ho
B-1
<PAGE>
ANNEX C
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
Capitalized terms used herein shall have the meanings set forth in the
Credit Agreement (the "Credit Agreement") dated as of November 18, 1994 among
Ticketmaster Group, Inc., an Illinois corporation ("Borrower"), Wells Fargo
Bank, National Association, a national banking association and the other
financial institutions which are or hereafter become signatories thereto and
which are identified on SCHEDULE A thereto, as amended from time to time, and
Wells Fargo Bank, National Association, a national banking association, as agent
for the Lenders thereunder. Subsection references herein relate to the
subsections of the Credit Agreement. Reference should be made to the relevant
sections (and related definitions) set forth in the Credit Agreement with
respect to concepts stated below in summary fashion. If a conflict exists, the
Credit Agreement shall control.
A. LIQUIDITY RATIO
1. Cash $
----------
2. Cash Equivalents $
----------
3. Client Accounts Receivables $
----------
4. Client Accounts Payable $
----------
5. Liquidity (lines (1+2+3) - line 4) $
----------
6. Minimum liquidity under Section 5.9(a) $1.00
B. MAXIMUM LEVERAGE RATIO (as of , 19 )
------------- --
1. (a) Debt with respect to borrowed
money: $
----------
(b) Proximate Contingent Obligations: $
----------
(c) Total of (a) and (b): $
----------
2. (a) EDITDA (see line D8 below): $
----------
(b) Cash dividends: $
----------
1
<PAGE>
(c) Distributions to minority
interests: $
----------
(d) EDITDA generated by assets
or operations sold: $
----------
(e) Cash Flow for the twelve month $
period then ended ((a)+(b)- ----------
(c)-(d)):
3. Leverage Ratio (line 1(c):line 2(e)): :1.00
----
4. Maximum Permissible Leverage Ratio
for period under subsection 5.9(b): :1.00
----
C. FREE CASH FLOW COVERAGE RATIO (as of , 19 )
------------ --
1. (a) Cash Flow for the twelve month
period then ended (see line B2(e) $
above) ----------
(b) Capital Expenditures for
the twelve month period then
ended: $
----------
(c) Dividends paid in cash during
such period on any equity
securities issued by Borrower: $
----------
(d) Redemptions of any such
securities or other withdrawals
of equity for cash during such
period: $
----------
(e) Total of ((a)-((b)+(c)+(d))): $
----------
2. Sum of all payments made on account
of principal of, or interest on,
Debt (other than principal paid on
Debt under Existing Credit Agreement
and Debt described on Schedule 2.1(a)): $
---------
3. Free Cash Flow Coverage Ratio
(line 1(e):line 2): :1.00
----
4. Minimum Free Cash Flow Coverage Ratio
under Section 5.9(c): 1.50:1.00
D. MINIMUM EBITDA (as of , 19 )
---------- --
1. Earnings of Borrower for
the Fiscal Year: $
-----------
2. Total interest expense: $
-----------
3. Provision for taxes based on
2
<PAGE>
income: $
-----------
4. Total depreciation expense: $
-----------
5. Total amortization expense: $
-----------
6. Minority interests: $
-----------
7. Non-recurring and non-ordinary
losses, losses from asset sales
in excess of $500,000: $
-----------
8. Non-recurring and non-ordinary
gains, gains from asset sales
in excess of $500,000: $
-----------
9. Equity interest in Earnings of Unrestricted
Entities (to the extent included above): $
-----------
10. EBITDA (1+2+3+4+5+6+7-(8+9)): $
-----------
11. Minimum EBITDA required under
subsection 5.9(d):
(a) Fiscal Year ended 1/31/95 $34,000,000
(b) Fiscal Years ending thereafter $36,000,000
E. ADJUSTED LEVERAGE RATIO (as of , 19 )
---------- --
1. Debt for borrowed money and
reimbursement obligations for
letters of credit other than
secured Term Loans: $
----------
2. (a) EBITDA: $
----------
(b) cash dividends received and
unrestricted cash dividends
declared: $
----------
(c) distributions to minority
shareholders: $
----------
(d) EBITDA generated by assets or
operations sold: $
----------
(e) Total ((a)+(b)-(c)-(d)): $
----------
3. Adjusted Leverage Ratio
(line 1:line 2(e)): :1.00
---
3
<PAGE>
F. CAPITAL EXPENDITURES (as of , 1994)
------------
1. Capital Expenditures year to date: $
----------
2. Maximum permissible Capital
Expenditures under Section 6.2: $10,000,000
G. OTHER INDEBTEDNESS (as of , 19 )
------------- --
1. Capital lease obligations: $
----------
2. Maximum permissible capital lease
obligations under Section 6.4: $3,000,000
3. Purchase money debt: $
----------
4. Maximum permissible amount of purchase
money debt under Section 6.4: $1,000,000
H. MAKE-WELL AGREEMENTS (as of , 19 )
--------- --
1. Aggregate liability under all
Make-Well Agreements: $
----------
2. 50% of Cash Flow (see line B2(e)
above) $
----------
3. Greater of line H2 and
$15,000,000 $
----------
I. ACQUISITIONS (as of , 19 )
---------- --
1. Aggregate Debt of all Acquisition
Candidates acquired in the fiscal
year: $
----------
2. Maximum permissible aggregate Debt
of all Acquisition Candidates
under Section 6.12: $1,000,000
3. Acquisition Candidate's EDITDA
for prior 12 months (PROVIDE FOR
EACH ACQUISITION CANDIDATE): $
----------
4
<PAGE>
TICKETMASTER GROUP, INC.
THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
AND AMENDMENT TO GUARANTOR PLEDGE AGREEMENT
This THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT AND
AMENDMENT TO GUARANTOR PLEDGE AGREEMENT (this "AMENDMENT") is dated as of April
7, 1995 and entered into by and among Ticketmaster Group, Inc., an Illinois
corporation ("BORROWER"), the financial institutions listed on the signature
pages hereof ("LENDERS") and Wells Fargo Bank, National Association, as agent
for Lenders ("AGENT"), and, for purposes of Sections 3 and 6 hereof, the Credit
Support Parties (as defined in Section 6 hereof) listed on the signature pages
hereof, and is made with reference to that certain Credit Agreement dated as of
November 18, 1994, as amended by the First Amendment to Credit Agreement dated
as of January 6, 1995 and the Second Amendment to Credit Agreement dated as of
January 30, 1995 (as so amended, the "CREDIT AGREEMENT"), by and among Borrower,
the Lenders named therein and Agent. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
WHEREAS, Borrower and Lenders desire to amend Section 5.3(b) of Credit
Agreement to provide the Borrower 15 additional days to deliver unaudited
financial statements for its fourth fiscal quarter in each fiscal year;
WHEREAS, Borrower has requested that Lenders waive its compliance with
Section 5.3(b) of the Credit Agreement to the extent necessary to permit
Borrower to deliver unaudited financial statements for its fiscal quarter ended
January 31, 1995 on or before April 14, 1995;
WHEREAS, after consideration of various tax issues, Lenders have
agreed not to require the execution and delivery of a guaranty by TM Number One
Limited and have agreed that only 65% of the capital stock of TM Number One
Limited will be pledged as security for the Obligations under the Guarantor
Pledge Agreement, and, accordingly, Lenders have agreed to delete Section
5.13(b), in its entirety, from the Credit Agreement;
WHEREAS, Borrower and Lenders have agreed that the Borrower should
not, directly or indirectly, invest more than $50,000,000 in any single
Unrestricted Entity; and
WHEREAS, Lenders and Guarantors desire to modify Schedule A to the
Guarantor Pledge Agreement to add, as additional Pledged Shares, 100% of the
outstanding shares of TM Cinema Group Ltd.
1
<PAGE>
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
A. AMENDMENTS TO ARTICLE 1: DEFINITIONS. Section 1.41 of the
Credit Agreement is hereby amended by deleting the phrase ", and that certain
Pledge Agreement to be entered into by TM Number One Limited" therefrom.
Section 1.58 of the Credit Agreement is hereby amended by deleting the reference
to "Section 1.20" therefrom and substituting therefor a reference to "Section
1.23."
B. AMENDMENT TO SECTION 5.3(B): DELIVERY OF QUARTERLY FINANCIAL
STATEMENTS. Section 5.3(b) of the Credit Agreement is hereby amended by
deleting the phrase reading "not later than forty-five (45) days after the end
of each of Borrower's fiscal quarters" from the first two lines thereof and
substituting therefor the phrase reading "not later than forty-five (45) days
after the end of each of the first three fiscal quarters in each Fiscal Year of
Borrower and not later than sixty (60) days of the end of the fourth fiscal
quarter in each Fiscal Year of Borrower".
C. DELETION OF SECTION 5.13(B): DELIVERY OF A GUARANTY BY TM NUMBER
ONE LIMITED. Section 5.13 of the Credit Agreement is hereby amended by deleting
clause (b) therefrom in its entirety and substituting therefor a clause reading
"(b) [Intentionally Omitted.]"
D. AMENDMENT TO SECTION 6.8: LIMITATIONS ON INVESTMENTS. Section
6.8 of the Credit Agreement is hereby amended by inserting, immediately after
the word "provided" in the first proviso of clause (k) thereof a clause reading,
"that the aggregate Investment in any single Unrestricted Entity shall at no
time exceed $50,000,000; provided further"
SECTION 2. LIMITED WAIVER OF CREDIT AGREEMENT
Lenders hereby waive Borrower's compliance with (a) Section 5.3(b) of
the Credit Agreement to the extent, and only the extent, necessary to permit
Borrower to deliver the financial statements required thereunder in relation to
Borrower's fiscal quarter ended January 31, 1995, on or before April 14, 1995,
and (b) Section 5.3(a) of the Credit Agreement to the extent, and only the
extent, necessary to permit Borrower to deliver the financial statements
required thereunder in relation to Borrower's fiscal year ended January 31,
1995, on or before May 19, 1995.
The foregoing waiver shall be limited exactly as written, and, without
limiting the generality of the forgoing, such waiver shall not be construed or
deemed a waiver of any other provision of the Credit Agreement or a waiver of
the provisions of Section 5.3(b) of the Credit Agreement insofar as they specify
the financial statements and certificates required to
2
<PAGE>
be delivered thereunder or the times at which such financial statements and
certificates must be delivered in relation to any other fiscal quarter of
Borrower.
SECTION 3. MODIFICATION TO GUARANTOR PLEDGE AGREEMENT
Lenders hereby authorize and direct, and Agent and the Credit Support
parties party to the Guarantor Pledge Agreement hereby agree, that Schedule A to
the Guarantor Pledge Agreement is hereby amended by (i) inserting the number
"65" and the word "ordinary" opposite TM Number One Limited in the columns under
the headings "Number of Shares" and "Class," respectively, and (ii) adding the
following description of additional pledged shares at the end thereof under the
headings indicated:
Name in Debtor's Juris-
Number Which Percent- diction of
of Cert. Certificate age Incorpor-
Issuer Shares Class Number(s) Issued Ownership ation
--------- ------ ----- --------- ----------- --------- -------
Ticketmaster
Cinema Group 1,000 Common 1 Ticketmaster 100 Delaware
Ltd. Corporation
SECTION 4. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "THIRD AMENDMENT EFFECTIVE DATE"):
A. On or before the Third Amendment Effective Date, Borrower shall
deliver to Agent copies of this Amendment executed by Borrower and each Credit
Support Party.
B. On or before the Third Amendment Effective Date, Agent shall have
received from Required Lenders an executed copy of this Amendment.
SECTION 5. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment, Borrower
represents and warrants to each Lender that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
3
<PAGE>
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment have been duly authorized by all necessary corporate action on the
part of Borrower and the Credit Support Parties, as the case may be.
C. NO CONFLICT. The execution, delivery and performance by each of
Borrower and Guarantors of this Amendment do not violate any provision of any
law or regulation applicable to such Person the violation of which could
reasonably be expected to have a Material Adverse Effect, or contravene any
provision of such Person's articles of incorporation or by-laws, or result in or
constitute a Defined Default under any contract, obligation, indenture or other
instrument to which such Person is a party or by which such Person may be bound
which default could reasonably be expected to have a Material Adverse Effect.
D. GOVERNMENTAL CONSENTS. No Governmental Approval is required in
connection with the execution, delivery and performance by Borrower or any
Guarantor of this Amendment, the performance by Borrower of the Amended
Agreement or the performance by Borrower or any Guarantor of the transactions
contemplated hereby or thereby or to ensure the legality, validity or
enforceability hereof or thereof.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement
have been duly executed and delivered by Borrower and are the legally valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Third Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. Upon giving effect to this Amendment, no
event has occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute an Event of
Default or a Potential Event of Default.
SECTION 6. ACKNOWLEDGEMENT AND CONSENT
Each Guarantor is a party to the Guaranty and, in the case of certain
Guarantors, the Guarantor Pledge Agreement pursuant to which each Guarantor has
guarantied the Obligations on the terms (and to the extent) set forth in the
Guaranty and certain Guarantors
4
<PAGE>
have created Liens in favor of Agent on certain Collateral to secure the
Obligations on the terms (and to the extent) set forth in the Guarantor Pledge
Agreement. The Third Party Pledgor has created a Lien on certain Collateral to
secure the Obligations pursuant to (and to the extent set forth in) the Third
Party Pledge Agreement. The Guarantors and the Third Party Pledgor are
collectively referred to herein as the "CREDIT SUPPORT PARTIES", and the
Guaranty, the Guarantor Pledge Agreement and the Third Party Pledge Agreement
are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible in accordance with the applicable provisions of the Credit Support
Documents the payment and performance of all guarantied or secured obligations.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Credit Support Documents to which it is a party or otherwise bound are true,
correct and complete in all material respects on and as of the Third Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
Each Credit Support Party acknowledges and agrees that
(i) notwithstanding the conditions to effectiveness set forth in this Amendment,
such Credit Support Party is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of such Credit Support Party to any future amendments to the Credit Agreement.
SECTION 7. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Third Amendment Effective Date, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or
words of like import
5
<PAGE>
referring to the Credit Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent or
any Lender under, the Credit Agreement or any of the other Loan Documents.
B. FEES AND EXPENSES. Borrower acknowledges that all costs, fees
and expenses as described in subsection 9.3 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Borrower.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of Page Intentionally Left Blank]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
TICKETMASTER GROUP, INC.,
AN ILLINOIS CORPORATION
By:
-----------------------
Title:
--------------------
CREDIT SUPPORT PARTIES:
TICKETMASTER CORPORATION,
AN ILLINOIS CORPORATION
TICKETMASTER-SOUTHERN
CALIFORNIA, INC., A CALIFORNIA
CORPORATION
TICKETMASTER-ARIZONA, INC., AN
ARIZONA CORPORATION
TICKETMASTER CORPORATION OF
WASHINGTON, A WASHINGTON
CORPORATION
TICKETMASTER-COLORADO, INC., A
COLORADO CORPORATION
TICKETMASTER-INDIANA, INC., AN
INDIANA CORPORATION
TICKETMASTER-GEORGIA, INC., A
GEORGIA CORPORATION
TICKETMASTER-CHICAGO, INC., AN
ILLINOIS CORPORATION
TICKETMASTER-MIDWEST, INC., A
MINNESOTA CORPORATION
By:
----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-1
<PAGE>
TICKETMASTER ADVERTISING
COMPANY, AN ILLINOIS CORPORATION
TMC CONSULTANTS, INC., AN
ILLINOIS CORPORATION
TICKETMASTER-TENNESSEE, INC., A
TENNESSEE CORPORATION
TICKETMASTER-LAS VEGAS, INC., A
NEVADA CORPORATION
TMNY HOLDINGS, INC., A NEW YORK
CORPORATION
TICKETMASTER-NEW YORK, INC., A
DELAWARE CORPORATION
TICKETMASTER-MICHIGAN, INC., A
MICHIGAN CORPORATION
TICKETMASTER FLORIDA
MANAGEMENT CORPORATION, A
FLORIDA CORPORATION
TICKETMASTER EUROPE, INC.,
A DELAWARE CORPORATION
TICKETMASTER-TEXAS MANAGEMENT
CORPORATION, A DELAWARE
CORPORATION
ENTERTAINMENT STRATEGIES, LTD.,
A CALIFORNIA CORPORATION
TICKETMASTER MASSACHUSETTS,
INC., A MASSACHUSETTS
CORPORATION
TICKETMASTER-NEW ORLEANS, INC.,
A LOUISIANA CORPORATION
TICKETMASTER CORPORATION,
A DELAWARE CORPORATION
By:
-----------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
PAUL ALLEN
S-2
<PAGE>
--------------------------------
LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
INDIVIDUALLY AS A LENDER AND AS AGENT
By:
-----------------------------
Title:
--------------------------
U.S. BANK OF WASHINGTON, N.A., AS A LENDER
By:
-----------------------------
Title:
--------------------------
BANQUE NATIONALE DE PARIS, AS A LENDER
By:
-----------------------------
Title:
--------------------------
FIRST BANK NATIONAL ASSOCIATION, AS A LENDER
By:
-----------------------------
Title:
--------------------------
S-3
<PAGE>
BANQUE PARIBAS, AS A LENDER
By:
-----------------------------
Title:
--------------------------
S-4
<PAGE>
Borrower and Ticketmaster Corporation, an Illinois corporation,
hereby that, on or before June 12, 1995, Ticketmaster Corporation, an Illinois
corporation, shall deliver to Agent resolutions of its Board of Directors
approving and authorizing the execution, delivery, and performance of this
Amendment and the pledge of the stock of TM Cinema Ltd. contemplated herein,
together with a signature and incumbency certificate of its officers executing
this Amendment, and Borrower agrees that the failure to deliver such resolutions
and certificate on or before such date shall constitute an Event of Default
under the Credit Agreement.
S-5
<PAGE>
TICKETMASTER GROUP, INC.
FOURTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT,
AMENDMENT TO GUARANTOR PLEDGE AGREEMENT AND
AMENDMENT TO THIRD PARTY PLEDGE AGREEMENT
This FOURTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT,
AMENDMENT TO GUARANTOR PLEDGE AGREEMENT AND AMENDMENT TO THIRD PARTY PLEDGE
AGREEMENT (this "AMENDMENT") is dated as of August 28, 1995 and entered into by
and among Ticketmaster Group, Inc., an Illinois corporation ("BORROWER"), the
financial institutions listed on the signature pages hereof ("LENDERS") and
Wells Fargo Bank, National Association, as agent for Lenders ("AGENT"), the
undersigned Guarantors (for purposes of Sections 4, 9, 11A, and 12 hereof only),
and Paul Allen, as the Third Party Pledgor (for the purposes of Sections 5, 10,
11B and 12 only), and is made with reference to that certain Credit Agreement
dated as of November 18, 1994, as amended by the First Amendment to Credit
Agreement dated as of January 6, 1995, the Second Amendment to Credit Agreement
dated as of January 30, 1995 and the Third Amendment and Limited Waiver to
Credit Agreement and Amendment to Guarantor Pledge Agreement dated as of
April 7, 1995 (as so amended, the "CREDIT AGREEMENT"), by and among Borrower,
the Lenders named therein ("EXISTING LENDERS") and Agent. Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Credit Agreement.
RECITALS
WHEREAS, Borrower and Lenders desire to amend the Credit Agreement (a)
to convert $35,000,000 of outstanding Revolving Loans to Term Loans, (b) to
change the collateral coverage required in relation to the Term Loans, (c) to
increase the minimum Applicable Margin at all times that the Terms Loans remain
outstanding, (d) to provide for reductions in the Revolving Loan Commitments,
(e) to amend the financial covenants, (f) to add as a Lender under the Credit
Agreement the financial institution identified on the signature pages of this
Amendment as the "New Lender," and (g) to make such other amendments to the
Credit Agreement as are set forth herein, in each case on the terms and in the
manner set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1
<PAGE>
A. AMENDMENT TO SECTION 1.4: DEFINITION OF APPLICABLE MARGIN.
Section 1.4 of the Credit Agreement is hereby amended by deleting the last
sentence thereof in its entirety and substituting therefor a sentence reading as
follows:
"Notwithstanding the foregoing, from August 28, 1995 until such date
as the Term Loans are repaid in full, the Applicable Margin with
respect to LIBOR shall not be less than 1.625%."
B. AMENDMENT TO SECTION 1.80: DEFINITION OF REQUIRED LENDERS.
Section 1.80 of the Credit Agreement is hereby amended by deleting therefrom the
phrase reading "any Lender or Lenders" and substituting therefor the phrase
reading "two or more Lenders".
C. AMENDMENTS TO SECTION 2.1: REVOLVING LOAN COMMITMENTS. Section
2.1(a) of the Credit Agreement is hereby amended by inserting, at the end of the
first sentence thereof, the following proviso:
"; provided, further, the proceeds of Revolving Loans borrowed on or
after August 28, 1995, which cause the aggregate principal amount of
Loans outstanding to exceed the aggregate principal amount of Loans
outstanding on August 28, 1995 shall be used by Borrower solely (a) to
make loans and advances to and investments in the Australian joint
ventures doing business as 'Ticketmaster Australasia', (b) to make
loans to Eric Chandler Merchandising Partners, Inc. (or an affiliate
thereof) to fund its 1996 Atlanta Olympic merchandising operations,
(c) to make additional loans and advances to and investments in TM
Publishing Inc. and (d) to support the business operations conducted
by Borrower and its Restricted Entities."
Section 2.1(a) of the Credit Agreement is hereby further amended by deleting the
last sentence of the second paragraph thereof and substituting therefor the
following three sentences:
"As of the close of business on August 28, 1995, $35,000,000 principal
amount of the Revolving Loans then outstanding shall be converted into
Term Loans, and Borrower, Lenders and Agent shall make such notations
in their respective records (including, without limitation, their Loan
Accounts and the Register) as are appropriate to reflect the increase
in the principal amount of the outstanding Term Loans and the
corresponding decrease in the outstanding principal amount of the
Revolving Loans. Such conversion shall be automatic and shall occur
without any action by, or notice to or from, Borrower, Agent, any
Lender or any other Person. Notwithstanding anything to the contrary
contained herein, all outstanding principal of and accrued but unpaid
interest on the Revolving Loans shall be due and payable in full not
later than the Maturity Date."
2
<PAGE>
D. AMENDMENT TO SECTION 2.2(a): TERM LOANS. Section 2.2(a) of the
Credit Agreement is hereby amended by inserting at the end thereof the following
sentence:
"On August 28, 1995, the principal amount of the Term Loan outstanding
shall be increased by an amount equal to the principal amount of the
Revolving Loans converted, pursuant to Section 2.1(a), into Term
Loans."
E. AMENDMENT TO SECTION 2.7: REDUCTIONS OF REVOLVING COMMITMENTS.
Section 2.7 of the Credit Agreement is hereby amended by deleting such section
in its entirety and substituting the following therefor:
"SECTION 2.7 CANCELLATION OR REDUCTION OF REVOLVING LOAN
COMMITMENTS.
(a) OPTIONAL REDUCTIONS. At any time and from time to time,
Borrower may irrevocably cancel or permanently reduce the unused
portion of the Revolving Loan Commitments by giving Agent not less
than five (5) Business Days' prior written notice thereof; provided,
however, that any partial reduction shall be in an amount equal to
Five Million Dollars ($5,000,000) or any greater whole multiple of Ten
Thousand Dollars ($10,000); and provided further, that no such
voluntary reduction shall reduce the Revolving Loan Commitments below
the aggregate unpaid principal amount of Borrowings thereunder
outstanding on the date of such reduction. Such termination or
partial reduction of the Revolving Loan Commitments shall be effective
on the date specified in Borrower's notice.
(b) MANDATORY REDUCTIONS. As of the close of business on
August 28, 1995, the Revolving Loan Commitments shall be permanently
reduced by an amount equal to any excess of the Revolving Loan
Commitments as then in effect over $100,000,000; as of the close of
business on December 31, 1997, the Revolving Loan Commitments shall be
permanently reduced by an amount equal to any excess of the Revolving
Loan Commitments as then in effect over $90,000,000; and as of the
close of business on December 31, 1998, the Revolving Loan Commitments
shall be permanently reduced by an amount equal to any excess of the
Revolving Loan Commitments as then in effect over $75,000,000. Each
such reduction shall be automatic and shall occur without any action
by, or notice to or from, Borrower, Agent, any Lender or any other
Person.
F. AMENDMENT TO SECTION 2.8(c): MANDATORY PREPAYMENTS. Section
2.8(c) of the Credit Agreement is hereby amended by deleting the word "and"
immediately preceding clause (iii) of such section and substituting a comma (,)
therefor and by inserting the word "and" at the end of clause (iii) thereof
immediately followed by the following clause (iv):
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<PAGE>
"(iv) 100% of the excess of the Total Utilization of the Revolving
Loan Commitments over the Revolving Loan Commitments then in effect"
G. AMENDMENT TO SECTION 2.12(d): PRO RATA TREATMENT. Section
2.12(d) of the Credit Agreement is hereby amended by deleting the word "and"
immediately preceding clause (iii) of such section and substituting a comma (,)
therefor and by inserting the word "and" at the end of clause (iii) thereof
(following the parenthetical clause at the end of clause (iii)) immediately
followed by the following clause (iv):
"(iv) outstanding Revolving Loans that are converted into Term Loans
in accordance with the provisions of the second paragraph of Section
2.1 shall be converted in accordance with the respective Pro Rata
Shares of the Lenders"
H. AMENDMENT TO SECTION 2.15(b): COLLATERAL FOR TERM LOANS.
Section 2.15(b) of the Credit Agreement is hereby amended by deleting the first
sentence thereof in its entirety and substituting the following sentence
therefor:
"The Term Loans will also be secured by a first priority Lien granted
by Third Party Pledgor in favor of Agent for the benefit of the
Lenders in publicly traded common stock (with no restriction that
would prohibit or delay any sale thereof immediately upon the
occurrence of an Event of Default) or investment grade bonds ("TERM
LOAN COLLATERAL") having an aggregate market value equal to no less
than (a) $52,000,000 or such amount as will cause the ratio of the
outstanding Term Loans to Term Loan Collateral to equal no more than
76.92% at all times prior to August 28, 1995, and (b) $90,000,000 or
such amount as will cause the ratio of the outstanding Term Loans to
Term Loan Collateral to equal no more than 83.33% at all times on or
after August 28, 1995."
I. AMENDMENTS TO SECTION 5.9(b): MAXIMUM LEVERAGE RATIO. Section
5.9(b) of the Credit Agreement is hereby amended by deleting therefrom in their
entirety, from the first table set forth therein, the lines reading as follows:
"Closing Date through January 31, 1996 5.5 to 1
February 1, 1996 through January 31, 1997 4.75 to 1"
and substituting therefor the following lines:
"August 1, 1995 through October 31, 1995 7.00 to 1
November 1, 1995 through April 30, 1996 6.50 to 1
May 1, 1996 through July 31, 1996 6.40 to 1
August 1, 1996 through January 31, 1997 4.75 to 1"
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<PAGE>
J. AMENDMENTS TO SECTION 5.9(c): FREE CASH FLOW COVERAGE RATIO.
Section 5.9(c) is hereby amended by deleting the phrase reading "1.5 to 1.0"
from the end thereof and substituting the following clause therefor:
"1.1 to 1.0 for any such fiscal quarters ending during the period from
February 1, 1995 through July 31, 1996, and 1.5 to 1.0 for any such
fiscal quarters ending on or after August 1, 1996"
K. AMENDMENTS TO SECTION 5.9(d): MINIMUM EBITDA. Section 5.9(d) is
hereby amended by deleting such clause in its entirety and substituting the
following therefor:
"(d) MINIMUM EBITDA. The EBITDA of Borrower shall not be less than
(i) $34,000,000 for the Borrower's Fiscal Year ending on January 31,
1995, (ii) $32,000,000 for the Borrower's Fiscal Year ending on
January 31, 1996 and (iii) $36,000,000 for any Fiscal Year of the
Borrower ending thereafter."
L. FURTHER AMENDMENTS TO SECTION 5.9: ADDITION OF REVOLVING LOAN
COVERAGE RATIO. Section 5.9 is hereby further amended by adding at the end
thereof the following subparagraph (e):
"(e) REVOLVING LOAN COVERAGE RATIO. As of the end of each
fiscal quarter of Borrower ending during the periods set forth below,
maintain a ratio of (i) the principal amount of the Revolving Loans
outstanding on such fiscal quarter end to (ii) Cash Flow for the
twelve month period then ended of not more than the amount set forth
below for the correlative period:
PERIOD REVOLVING LOAN COVERAGE RATIO
August 1, 1995 through October 31, 1995 4.25 to 1
November 1, 1995 through January 31, 1996 4.00 to 1
February 1, 1996 through April 30, 1996 3.90 to 1
May 1, 1996 through July 31, 1996 3.80 to 1
August 1, 1996 through the Maturity Date 3.75 to 1"
M. AMENDMENT TO SECTION 5.13: PLEDGES OF ADDITIONAL COLLATERAL.
Section 5.13(b) of the Credit Agreement is hereby amended by deleting such
section in its entirety and substituting therefor the following:
"(b) If Borrower or any Restricted Entity shall make loans or
advances pursuant to clauses (k), (l), (m), and (n) of Section 6.8,
Borrower or such Restricted Entity, as applicable, shall cause such
loans and advances to be evidenced by a promissory note and shall
pledge such note to Agent as Collateral pursuant to a pledge agreement
in form and substance reasonably satisfactory to Agent; provided that
this Section 5.13(b) shall only be applicable
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<PAGE>
to loans and advances made to Unrestricted Entities pursuant to Clause
6.8(k) when the aggregate investment (whether by stock purchase, loan,
capital contribution or otherwise) by Borrower, any Subsidiary or
Partnership in such Unrestricted Entity exceeds $2,500,000; provided
further that this Section 5.13(b) shall only be applicable to loans
and advances made to any of the Australian joint ventures doing
business as 'Ticketmaster Australasia' to the extent (x) the proceeds
thereof comprise a portion of the initial capitalization of such joint
ventures or (y) such loans have a maturity date after the first
anniversary of the date they were made and have an aggregate principal
amount in excess of $1,000,000."
N. AMENDMENT TO SECTION 6.8: LOANS AND INVESTMENTS. Section 6.8 of
the Credit Agreement is hereby amended by deleting the word "and" immediately
preceding clause (k) thereof and substituting a comma (,) therefor, by inserting
a comma (,) at the end of clause (k) thereof immediately followed by the
following clauses (l) and (m):
"(l) a loan by Borrower in an amount not to exceed $2,000,000 to
3471, Inc., a Florida corporation, which loan shall be secured by
a pledge of 3471, Inc.'s 20% stock ownership in Ticketmaster
Florida, Inc., (m) loans and other advances by Borrower or any
Restricted Entity, in an aggregate outstanding principal amount
not exceeding $8,000,000 at any time, to Eric Chandler
Merchandising Partners, Inc. (or an affiliate thereof) to fund
its 1996 Atlanta Olympic merchandising operations; provided that
Borrower or any of its Restricted Subsidiaries has financial
oversight over such operations pursuant to the terms of a
management and consulting agreement which Agent reasonably
determines to be effective to give Borrower or any such
Restricted Subsidiary such financial oversight and (n) loans and
other advances by Borrower or any Restricted Entity to any of the
Australian joint ventures doing business collectively as
'Ticketmaster Australasia'.";
Section 6.8 of the Credit Agreement is hereby further amended by inserting at
the end there of the following proviso:
"; provided still further that the loans and advances permitted
pursuant to clauses (k), (l), (m) and (n) above shall be evidenced by
a promissory note, and Borrower and/or such Restricted Entity, as the
case may be, shall pledge such note to Agent in accordance with the
provisions of Section 5.13(b); provided still further that the
foregoing proviso shall only be applicable to loans and advances made
to Unrestricted Entities when the aggregate investment (whether
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<PAGE>
by stock purchase, loan, capital contribution or otherwise) by
Borrower, any Subsidiary or Partnership in such Unrestricted Entity
exceeds $2,500,000; provided still further that the foregoing proviso
shall only be applicable to loans and advances made to any of the
Australian joint ventures doing business as 'Ticketmaster Australasia'
to the extent (x) the proceeds thereof comprise a portion of the
initial capitalization of such joint ventures or (y) such loans have a
maturity date after the first anniversary of the date they were made
and have an aggregate principal amount in excess of $1,000,000.
O. AMENDMENT OF SCHEDULES
(i) SCHEDULE A: LENDERS. SCHEDULE A to the Credit Agreement is
hereby amended by deleting said SCHEDULE A in its entirety and substituting in
place thereof a new SCHEDULE A in the form of ANNEX A to this Amendment.
(ii) SCHEDULE 9.2: LENDERS' NOTICE ADDRESSES. SCHEDULE 9.2 to the
Credit Agreement is hereby amended by deleting said SCHEDULE 9.2 in its entirety
and substituting in place thereof a new SCHEDULE 9.2 in the form of ANNEX B to
this Amendment.
P. MODIFICATION OF EXHIBIT
EXHIBIT 5.3(b): FORM OF COMPLIANCE CERTIFICATE. EXHIBIT 5.3(b) to
the Credit Agreement is hereby amended by deleting Attachment No. 1 therefrom in
its entirety and substituting therefor Attachment No. 1 in the form of ANNEX C
to this Amendment.
SECTION 2. ADDITION OF LENDERS; NOTICE ADDRESSES; ADDITIONAL NOTES
The Credit Agreement is hereby amended to include New Lender as a
Lender for all purposes and, as such, New Lender shall hereby become vested with
all the rights, powers, privileges and duties of a Lender under the Credit
Agreement and each of the other Loan Documents. For purposes of the Credit
Agreement, the address of New Lender shall be as set forth on SCHEDULE 9.2 in
the form of ANNEX B to this Amendment.
Borrower agrees to execute and deliver to Agent for Wells Fargo Bank,
National Association ("WELLS FARGO") and New Lender a Revolving Loan Note and a
Term Loan Note in the amount of such Lender's Revolving Loan Commitment and Term
Loan Commitment (after giving effect to the assignment by Wells Fargo to New
Lender) (each an "ADDITIONAL NOTE" and collectively the "ADDITIONAL NOTES"), in
the form of Exhibit 1.65A and 1.65B, respectively, to the Credit Agreement.
Each of the parties hereto hereby acknowledges and agrees that each Additional
Note is a Note for all purposes under the Credit Agreement and the other Loan
Documents and that the loans evidenced by the Additional Notes shall constitute
Loans for all purposes under the Credit Agreement and the other Loan Documents.
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<PAGE>
SECTION 3. LIMITED WAIVER OF CREDIT AGREEMENT; ACKNOWLEDGEMENT OF
NO UNCURED DEFAULTS
Lenders hereby waive any Event of Default heretofore arising solely
from Borrower's failure to comply with the provisions of Sections 5.9(b), 5.9(c)
and 6.8 of the Credit Agreement to the extent, and only the extent, that
Borrower would have been in compliance with such sections if the amendments
thereto to be effected pursuant to this Amendment were in effect from and after
April 7, 1995. Lenders and Borrower hereby waive failure to comply with
subsection 9.5(b) with respect to the portions of Loans and Commitments assigned
by Wells Fargo to New Lender pursuant to the terms hereof (i) to the extent the
amounts of such assignments are less than the amounts required by such
subsection 9.5(b) and (ii) to the extent that New Lender is not an Eligible
Assignee.
The foregoing waivers shall be limited exactly as written, and,
without limiting the generality of the forgoing, such waivers shall not be
construed or deemed a waiver of any other Event of Default or of Borrower's
compliance with any other section of the Credit Agreement.
Lenders acknowledge that they are not aware of any Event of Default
that will continue after giving effect to the foregoing waiver and the
amendments to the Credit Agreement to be effected by this Amendment.
SECTION 4. MODIFICATION TO GUARANTOR PLEDGE AGREEMENT
Lenders hereby authorize and direct, and Agent and the Credit Support
parties party to the Guarantor Pledge Agreement hereby agree, that Schedule A to
the Guarantor Pledge Agreement is hereby amended by deleting the number "100"
and substituting therefor the number "400" opposite Ticketmaster - Michigan,
Inc. in the column under the heading "Number of Shares".
SECTION 5. MODIFICATION TO THIRD PARTY PLEDGE AGREEMENT
Lenders hereby authorize and direct, and Agent and Paul Allen, as the
Third Party Pledgor, hereby agree, that paragraph C of Section 5 of the Third
Party Pledge Agreement is hereby amended by deleting the last four lines thereof
(beginning with the phrase "aggregate market value" and ending with "76.92%")
and substituting therefor the following:
"aggregate market value equal to (a) no less than $52,000,000 or such
amount as will cause the ratio of the outstanding principal amount of
the Term Loan to such stock and bonds to equal no more than 76.92% at
all times prior to August 28, 1995, and (b) no less than $90,000,000
or such amount as will cause
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the ratio of the outstanding principal amount of the Term Loan to such
stock and bonds to equal no more than 83.33% at all times on and after
August 28, 1995"
SECTION 6. AGREEMENT REGARDING LETTER OF CREDIT
Borrower and Lenders hereby agree that the letter of credit having a
stated amount of $30,000 issued by Wells Fargo for the benefit of the City of
Orlando, Florida on or about July 31, 1995, in replacement of the similar letter
of credit shown on Schedule 3.1 of the Credit Agreement shall, upon the
effectiveness of this Amendment, be deemed a Letter of Credit issued and
outstanding under the Credit Agreement.
SECTION 7. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective as of August 28, 1995 (the
"FOURTH AMENDMENT EFFECTIVE DATE") upon the satisfaction of all of the following
conditions precedent:
A. On or before the Fourth Amendment Effective Date, Borrower shall
deliver to Agent the following, each, unless otherwise noted, dated the Fourth
Amendment Effective Date:
1. Signature and incumbency certificates of Borrower's officers
executing this Amendment, the Additional Notes and the Replacement Notes
(as defined below);
2. Resolutions of Borrower's Board of Directors approving and
authorizing the execution, delivery, and performance of this Amendment and
approving and authorizing the execution, delivery and payment of the
Additional Notes and the Replacement Notes;
3. Copies of this Amendment executed by Borrower and each
Credit Support Party;
4. Term Loan Notes, substantially in the form of Exhibit 1.65B
to the Credit Agreement, with appropriate insertions, for each Existing
Lender, as increased in accordance with the provisions of this Amendment
(the "REPLACEMENT NOTES"); and
5. Additional Notes.
B. On or before the Fourth Amendment Effective Date, Agent shall
have received from Existing Lenders and New Lender an executed copy of this
Amendment.
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C. On or before the Fourth Amendment Effective Date, Borrower shall
pay to Agent, for distribution to those Existing Lenders that execute and
deliver counterparts of this Amendment, an amendment fee equal to 0.25% of the
sum of such Existing Lenders' Revolving Loan Commitments and Term Loans, as then
in effect and outstanding.
SECTION 8. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment, Borrower
represents and warrants to each Lender that the following statements are true,
correct and complete:
A. CORPORATE POWER AND AUTHORITY. Borrower has all requisite
corporate power and authority to enter into this Amendment, the Additional Notes
and the Replacement Notes and to carry out the transactions contemplated by, and
perform its obligations under, the Credit Agreement as amended by this Amendment
(the "AMENDED AGREEMENT") and the Replacement Notes.
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the issuance, delivery and payment of the Additional Notes and the
Replacement Notes have been duly authorized by all necessary corporate action on
the part of Borrower.
C. NO CONFLICT. The execution, delivery and performance by Borrower
of this Amendment and Guarantors of this Amendment and, in the case of Borrower,
the Additional Notes and the Replacement Notes do not violate any provision of
any law or regulation applicable to Borrower the violation of which could
reasonably be expected to have a Material Adverse Effect, or contravene any
provision of Borrower's articles of incorporation or by-laws, or result in or
constitute a Defined Default under any contract, obligation, indenture or other
instrument to which Borrower is a party or by which Borrower may be bound which
default could reasonably be expected to have a Material Adverse Effect.
D. GOVERNMENTAL CONSENTS. No Governmental Approval is required in
connection with the execution, delivery and performance by Borrower or any
Guarantor of this Amendment, and, in the case of Borrower, the Additional Notes
and the Replacement Notes, the performance by Borrower of the Amended Agreement
or to ensure the legality, validity or enforceability hereof or thereof.
E. BINDING OBLIGATION. This Amendment and the Replacement Notes
have been duly executed and delivered by Borrower, and this Amendment, the
Additional Notes, the Replacement Notes and the Amended Agreement are the
legally valid and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
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F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Fourth Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. Upon giving effect to this Amendment, no
event has occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute an Event of
Default or a Potential Event of Default.
SECTION 9. GUARANTOR'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment, each
Guarantor party to the Guarantor Pledge Agreement represents and warrants to
each Lender that the following statements are true, correct and complete:
A. CORPORATE POWER AND AUTHORITY. Such Guarantor has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Guarantor
Pledge Agreement as amended by this Amendment (the "AMENDED GUARANTOR PLEDGE").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment have been duly authorized by all necessary corporate action on the
part of such Guarantor.
C. BINDING OBLIGATION. This Amendment has been duly executed and
delivered by such Guarantor, and this Amendment and the Amended Guarantor Pledge
are the legally valid and binding obligations of such Guarantor, enforceable
against such Guarantor in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
SECTION 10. THIRD PARTY PLEDGOR'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment, Paul Allen,
as the Third Party Pledgor, represents and warrants to each Lender that the
following statements are true, correct and complete:
A. GOVERNMENTAL CONSENTS. No Governmental Approval is required in
connection with the execution, delivery and performance by the Third Party
Pledgor of this
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Amendment, the performance by the Third Party Pledgor of the Third Party Pledge
Agreement, as amended by this Amendment, or the performance by the Third Party
Pledgor of the transactions contemplated hereby or thereby or to ensure the
legality, validity or enforceability hereof or thereof.
B. BINDING OBLIGATION. This Amendment has been duly executed and
delivered by the Third Party Pledgor, and this Amendment and the Third Party
Pledge Agreement, as amended by this Amendment, are the legally valid and
binding obligations of the Third Party Pledgor, enforceable against the Third
Party Pledgor in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
SECTION 11. ACKNOWLEDGEMENT AND CONSENT
A. GUARANTORS. Guarantors are parties to the Guaranty, the
Guarantor Pledge Agreement (in the case of certain Guarantors), the Security
Agreement dated as of March 31, 1995 (the "Security Agreement") by the
Guarantors named therein (in the case of certain Guarantors) and the Second
Amended and Restated Trademark Mortgage Agreement dated as of March 31, 1995
(the "Trademark Agreement") between Ticketmaster Corporation and Agent (in the
case of Ticketmaster Corporation) pursuant to which each Guarantor has
guarantied the Obligations on the terms (and to the extent) set forth in the
Guaranty and certain Guarantors have created Liens in favor of Agent on certain
Collateral to secure the Obligations on the terms (and to the extent) set forth
in the Guarantor Pledge Agreement, the Security Agreement and the Trademark
Agreement. The Guaranty, the Guarantor Pledge Agreement (as heretofore amended
and as further amended hereby), the Security Agreement and the Pledge Agreement
are collectively referred to herein as the "GUARANTOR DOCUMENTS."
Each Guarantor hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each
Guarantor hereby confirms that each Guarantor Document to which it is a party or
otherwise bound and all Collateral encumbered thereby will continue to guaranty
or secure, as the case may be, to the fullest extent possible in accordance with
the applicable provisions of the Guarantor Documents the payment and performance
of all guarantied or secured obligations.
Each Guarantor acknowledges and agrees that any of the Guarantor
Documents to which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Guarantor represents and warrants that
all representations and warranties contained in the Credit Support Documents to
which it is a party or otherwise bound are true, correct and complete in all
material respects on and as of the Fourth Amendment Effective Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier
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<PAGE>
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date. Without limiting the generality of the
foregoing, each Guarantor hereby acknowledges and confirms the understanding and
intent of such party that, upon the effectiveness of this Amendment, and as a
result thereof, the definition of "Obligations" contained in the Amended
Agreement includes the obligations of Borrower under the Additional Notes and
the Replacement Notes.
Each Guarantor acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Guarantor is not
required by the terms of the Credit Agreement or any other Loan Document to
consent to the amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other
Loan Document shall be deemed to require the consent of such Guarantor to any
future amendments to the Credit Agreement.
B. THIRD PARTY PLEDGOR. The Third Party Pledgor has created a Lien
on certain Collateral to secure the Obligations pursuant to (and to the extent
set forth in) the Third Party Pledge Agreement. The Third Party Pledgor hereby
acknowledges that he has reviewed the terms and provisions of the Credit
Agreement and this Amendment and consents to the amendment of the Credit
Agreement effected pursuant to this Amendment.
Without limiting the generality of the foregoing the Third Party
Pledgor hereby expressly acknowledges and consents to (a) the $35,000,000
increase in the principal amount of the Term Loan to be effected by this
Amendment and (b) the increase in the minimum Applicable Margin for LIBOR
Borrowings to be effected by this Amendment and hereby agrees that, for the
purposes of the Third Party Pledge Agreement, the "Term Loan" shall mean the
Term Loan as so increased. The Third Party Pledgor hereby agrees that this
Amendment shall evidence his consent to such increase in the Term Loan and such
increase in the minimum Applicable Margin for LIBOR Borrowings for the purposes
of clause (f) of Section 15 of the Third Party Pledge Agreement.
The Third Party Pledgor confirms that the Third Party Pledge
Agreement and all Collateral encumbered thereby will continue to secure in
accordance with the applicable provisions of the Third Party Pledge Agreement
the payment and performance of all secured obligations.
The Third Party Pledgor acknowledges and agrees that the Third Party
Pledge Agreement shall continue in full force and effect and that all of his
obligations thereunder shall be valid and enforceable and shall not be impaired
or limited by the execution or effectiveness of this Amendment. The Third Party
Pledgor represents and warrants that all representations and warranties
contained in the Third Party Pledge Agreement are true, correct and complete in
all material respects on and as of the Fourth Amendment Effective Date to the
same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
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SECTION 12. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Fourth Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Amended
Agreement. On and after the Fourth Amendment Effective Date, each
reference in any Loan Document to the "Guarantor Pledge Agreement" or the
"Third Party Pledge Agreement," or references to matters "thereunder",
"thereof" or words of like import referring to the Guarantor Pledge
Agreement and the Third Party Pledge Agreement shall mean and be a
reference to the Guarantor Pledge Agreement or the Third Party Pledge
Agreement, respectively, in each case as amended by this Amendment.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Borrower acknowledges that all reasonable
costs, fees and expenses as described in subsection 9.3 of the Credit Agreement
incurred by Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Borrower.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. REPLACEMENT OF TERM LOAN NOTES. Each Lender agrees that upon
Borrower's execution and delivery to such Lender of a Term Loan Note
substantially in the form of Exhibit 1.65B to the Credit Agreement, with
appropriate insertions, to evidence the Term Loan of such Lender as increased in
accordance with the terms of this Amendment, the Term Loan Note heretofore
delivered to such Lender shall be deemed replaced and shall be of no further
force or effect, and each Lender agrees to return such replaced Note to Borrower
for cancellation.
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E. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
F. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
TICKETMASTER GROUP, INC.,
AN ILLINOIS CORPORATION
By:
-------------------------------
Title:
----------------------------
GUARANTORS (FOR THE PURPOSES OF SECTIONS 4, 9, 11A
AND 12 ONLY):
TICKETMASTER CORPORATION,
AN ILLINOIS CORPORATION
TICKETMASTER-SOUTHERN
CALIFORNIA, INC., A CALIFORNIA
CORPORATION
TICKETMASTER-ARIZONA, INC., AN
ARIZONA CORPORATION
TICKETMASTER CORPORATION OF
WASHINGTON, A WASHINGTON
CORPORATION
TICKETMASTER-COLORADO, INC., A
COLORADO CORPORATION
TICKETMASTER-INDIANA, INC., AN
INDIANA CORPORATION
TICKETMASTER-GEORGIA, INC., A
GEORGIA CORPORATION
TICKETMASTER-CHICAGO, INC., AN
ILLINOIS CORPORATION
TICKETMASTER-MIDWEST, INC., A
MINNESOTA CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-1
<PAGE>
TICKETMASTER ADVERTISING
COMPANY, AN ILLINOIS CORPORATION
TMC CONSULTANTS, INC., AN
ILLINOIS CORPORATION
TICKETMASTER-TENNESSEE, INC., A
TENNESSEE CORPORATION
TICKETMASTER-LAS VEGAS, INC., A
NEVADA CORPORATION
TMNY HOLDINGS, INC., A NEW YORK
CORPORATION
TICKETMASTER-NEW YORK, INC., A
DELAWARE CORPORATION
TICKETMASTER-MICHIGAN, INC., A
MICHIGAN CORPORATION
TICKETMASTER FLORIDA
MANAGEMENT CORPORATION, A
FLORIDA CORPORATION
TICKETMASTER EUROPE, INC.,
A DELAWARE CORPORATION
TICKETMASTER-TEXAS MANAGEMENT
CORPORATION, A DELAWARE
CORPORATION
ENTERTAINMENT STRATEGIES, LTD.,
A CALIFORNIA CORPORATION
TICKETMASTER-NEW ORLEANS, INC.,
A LOUISIANA CORPORATION
TICKETMASTER CORPORATION,
A DELAWARE CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
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THIRD PARTY PLEDGOR (FOR THE PURPOSES OF SECTIONS
5, 10, 11B AND 12 ONLY):
PAUL ALLEN
-----------------------------------
EXISTING LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
INDIVIDUALLY AS A LENDER AND AS AGENT
By:
----------------
Title:
-------------
U.S. BANK OF WASHINGTON, N.A., AS A LENDER
By:
----------------
Title:
-------------
BANQUE NATIONALE DE PARIS, AS A LENDER
By:
----------------
Title:
-------------
FIRST BANK NATIONAL ASSOCIATION, AS A LENDER
By:
----------------
Title:
-------------
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NEW LENDER:
CITY NATIONAL BANK, as a Lender
By:
----------------
Title:
-------------
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<PAGE>
ANNEX A
RESTATEMENT OF SCHEDULE A
SCHEDULE A
LENDERS AND PRO RATA SHARES
LENDER PRO RATA SHARE
Wells Fargo Bank, N.A. 69.14285714%
First Bank National Association 14.28571429%
U.S. Bank of Washington, N.A. 8.57142857%
City National Bank 2.85714286%
Banque Nationale de Paris 5.14285714%
A-1
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ANNEX B
SCHEDULE 9.2
NOTICE ADDRESSES FOR
LENDERS (OTHER THAN WELLS FARGO)
U.S. Bank of Washington, N.A.
10800 NE 8th Street
Suite 1000
Bellevue, WA 98004
(206) 450-5918
FAX: (206) 450-5989
Attention: Ann Caldwell
First Bank National Association
601 Second Avenue
Minneapolis, MN 55402-4302
(612) 973-1819
FAX: (612) 973-0824
Attention: Robert W. Miller
City National Bank
400 North Roxbury Drive
4th Floor
Beverly Hills, CA 90210
(310) 888-6208
FAX: (310) 888-6159
Attention: Norman Starr
Banque Nationale de Paris
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
(213) 488-9120
FAX: (213) 488-9602
Attention: Janice Ho
B-1
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ANNEX C
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
Capitalized terms used herein shall have the meanings set forth in the
Credit Agreement (the "Credit Agreement") dated as of November 18, 1994 among
Ticketmaster Group, Inc., an Illinois corporation ("Borrower"), Wells Fargo
Bank, National Association, a national banking association and the other
financial institutions which are or hereafter become signatories thereto and
which are identified on SCHEDULE A thereto, as amended from time to time, and
Wells Fargo Bank, National Association, a national banking association, as agent
for the Lenders thereunder. Subsection references herein relate to the
subsections of the Credit Agreement. Reference should be made to the relevant
sections (and related definitions) set forth in the Credit Agreement with
respect to concepts stated below in summary fashion. If a conflict exists, the
Credit Agreement shall control.
A. LIQUIDITY RATIO
1. Cash $__________
2. Cash Equivalents $__________
3. Client Accounts Receivables $__________
4. Client Accounts Payable $__________
5. Liquidity (lines (1+2+3) - line 4) $__________
6. Minimum liquidity under Section 5.9(a) $1.00
B. MAXIMUM LEVERAGE RATIO (as of _____________, 19__)
1. (a) Debt with respect to borrowed
money: $__________
(b) Proximate Contingent Obligations: $__________
(c) Total of (a) and (b): $__________
2. (a) EDITDA (see line D8 below): $__________
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(b) Cash dividends: $__________
(c) Distributions to minority
interests: $__________
(d) EDITDA generated by assets
or operations sold: $__________
(e) Cash Flow for the twelve month $__________
period then ended ((a)+(b)-
(c)-(d)):
3. Leverage Ratio (line 1(c):line 2(e)): ____:1.00
4. Maximum Permissible Leverage Ratio
for period under subsection 5.9(b): ____:1.00
C. FREE CASH FLOW COVERAGE RATIO (as of ____________, 19__)
1. (a) Cash Flow for the twelve month
period then ended (see line B2(e) $__________
above):
(b) Capital Expenditures for
the twelve month period then
ended: $__________
(c) Dividends paid in cash during
such period on any equity
securities issued by Borrower: $__________
(d) Redemptions of any such
securities or other withdrawals
of equity for cash during such
period: $__________
(e) Total of ((a)-((b)+(c)+(d))): $__________
2. Sum of all payments made on account
of principal of, or interest on,
Debt (other than principal paid on
Debt under Existing Credit Agreement
and Debt described on Schedule 2.1(a)): $_________
3. Free Cash Flow Coverage Ratio
(line 1(e):line 2): ____:1.00
4. Minimum Free Cash Flow Coverage Ratio
under Section 5.9(c): ____:1.00
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D. MINIMUM EBITDA (as of __________, 19__)
1. Earnings of Borrower for
the Fiscal Year: $___________
2. Total interest expense: $___________
3. Provision for taxes based on
income: $___________
4. Total depreciation expense: $___________
5. Total amortization expense: $___________
6. Minority interests: $___________
7. Non-recurring and non-ordinary
losses, losses from asset sales
in excess of $500,000: $___________
8. Non-recurring and non-ordinary
gains, gains from asset sales
in excess of $500,000: $___________
9. Equity interest in Earnings of Unrestricted
Entities (to the extent included above): $___________
10. EBITDA (1+2+3+4+5+6+7-(8+9)): $___________
11. Minimum EBITDA required under
subsection 5.9(d):
(a) Fiscal Year ended 1/31/95 $34,000,000
(b) Fiscal Year ended 1/31/96 $32,000,000
(c) Fiscal Years ending thereafter $36,000,000
E. REVOLVING LOAN COVERAGE RATIO (as of __________, 19__)
1. principal amount of Revolving Loans
outstanding on fiscal quarter end: $___________
2. Cash Flow for the twelve month
period then ended (see line B2(e)
above): $___________
3. Revolving Loan Coverage Ratio: _____:1.00
4. Minimum Revolving Loan Coverage Ratio:
required under subsection 5.9(e): _____:1.00
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F. ADJUSTED LEVERAGE RATIO (as of __________, 19__)
1. Debt for borrowed money and
reimbursement obligations for
letters of credit other than
secured Term Loans:
$__________
2. (a) EBITDA: $__________
(b) cash dividends received and
unrestricted cash dividends
declared: $__________
(c) distributions to minority
shareholders: $__________
(d) EBITDA generated by assets or
operations sold: $__________
(e) Total ((a)+(b)-(c)-(d)): $__________
3. Adjusted Leverage Ratio
(line 1:line 2(e)): ___:1.00
G. CAPITAL EXPENDITURES (as of ____________, 1994)
1. Capital Expenditures year to date: $__________
2. Maximum permissible Capital
Expenditures under Section 6.2: $10,000,000
H. OTHER INDEBTEDNESS (as of _____________, 19__)
1. Capital lease obligations: $__________
2. Maximum permissible capital lease
obligations under Section 6.4: $3,000,000
3. Purchase money debt: $__________
4. Maximum permissible amount of purchase
money debt under Section 6.4: $1,000,000
I. MAKE-WELL AGREEMENTS (as of _________, 19__)
1. Aggregate liability under all
Make-Well Agreements: $__________
2. 50% of Cash Flow (see line B2(e)
above) $__________
3. Greater of line H2 and
$15,000,000 $__________
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J. ACQUISITIONS (as of __________, 19__)
1. Aggregate Debt of all Acquisition
Candidates acquired in the fiscal
year: $__________
2. Maximum permissible aggregate Debt
of all Acquisition Candidates
under Section 6.12: $1,000,000
3. Acquisition Candidate's EDITDA
for prior 12 months (PROVIDE FOR
EACH ACQUISITION CANDIDATE): $__________
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TICKETMASTER GROUP, INC.
WAIVER DATED AS OF APRIL 30, 1996 TO
CREDIT AGREEMENT
DATED AS OF NOVEMBER 18, 1994
THIS WAIVER DATED AS OF APRIL 30, 1996 TO CREDIT AGREEMENT dated as of
November 18, 1994 (this "Waiver") is entered into by and among TICKETMASTER
GROUP, INC. ("Borrower"), the LENDERS named herein ("Lenders"), and WELLS FARGO
BANK, NATIONAL ASSOCIATION, as agent for Lenders ("Agent"). Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Credit Agreement referred to below.
R E C I T A L S
1. Borrower, Lenders and Agent entered into the Credit Agreement
dated as of November 18, 1994, as amended (as so amended, the "Credit
Agreement");
2. Subsection 5.3(a) of the Credit Agreement requires that Borrower
deliver audited financial statements and other information as soon as available
but not later than 90 days after the end of each Fiscal Year;
3. Borrower and Required Lenders desire to waive Borrower's
obligation to comply with subsection 5.3(a) with respect to its Fiscal Year
ending on January 31, 1996 for approximately a 45 day period upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions herein
contained, Borrower, Lenders and Agent hereby agree as follows:
SECTION 1. WAIVER TO SUBSECTION 5.3(a) OF THE CREDIT AGREEMENT
Subject to the terms and conditions set forth herein, Required Lenders
hereby waive for the period through and including June 14, 1996, any Event of
Default or Potential Event of Default under subsection 5.3(a) of the Credit
Agreement resulting solely from the failure of Borrower to deliver the audited
financial statements and other information required to be delivered under
subsection 5.3(a), it being understood that (i) Ticketmaster will deliver to the
Lenders by May 6, 1996 a "special purpose" combined statement of assets and
liabilities of certain companies consisting of Ticketmaster and "Restricted
Entities" (as defined in the Credit Agreement) and a related "special purpose"
combined statement of revenues and expenses before income taxes for the year
ended January 31, 1996,
<PAGE>
excluding a cash flow statement and notes to such statements, and (ii) the
waiver contained in this Section 1 shall in all events expire and cease to be
of force or effect on the close of business on June 14, 1996.
SECTION 2. LIMITATION OF WAIVER
The waiver set forth in Section 1 above shall be limited precisely as
written and relates solely to subsection 5.3(a) of the Credit Agreement and
nothing in this Waiver shall be deemed to: (1) constitute a waiver,
modification or amendment of any other term, provision or condition of the
Credit Agreement or any other instrument or agreement referred to therein;
(2) prejudice any right or remedy that Agent or Lenders may now have or may have
in the future under or in connection with the Credit Agreement or any other
instrument or agreement referred to therein, except as otherwise set forth
herein; or (3) create any obligation or agreement on the part of Agent or any
Lender to renew or extend the waiver set forth in Section 1 above. Except as
expressly set forth herein, the terms, provisions and conditions of the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
in all other respects are hereby ratified and confirmed.
SECTION 3. CONDITIONS TO EFFECTIVENESS.
This Waiver shall become effective as of the date hereof when Agent,
on behalf of Lenders, shall have received a counterpart of this Waiver executed
by a duly authorized officer of each of Borrower, Agent and Required Lenders.
SECTION 4. COUNTERPARTS.
This Waiver may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
SECTION 5. GOVERNING LAW.
This Waiver shall be governed by, and shall be construed and enforced
in accordance with, the laws of the State of California.
2
<PAGE>
WITNESS, the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
BORROWER:
TICKETMASTER GROUP, INC., an Illinois corporation
By:________________________________
Title:_____________________________
LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually as a Lender and as Agent
By:________________________________
Title:_____________________________
U.S. BANK OF WASHINGTON, N.A.,
as a Lender
By:________________________________
Title:_____________________________
FIRST BANK NATIONAL ASSOCIATION,
as a Lender
By:________________________________
Title:_____________________________
CITY NATIONAL BANK,
as a Lender
By:________________________________
Title:_____________________________
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BANQUE NATIONALE DE PARIS,
as a Lender
By:________________________________
Title:_____________________________
THE NIPPON CREDIT BANK, LTD., LOS ANGELES AGENCY,
as a Lender
By:________________________________
Title:_____________________________
SEATTLE FIRST NATIONAL BANK,
as a Lender
By:________________________________
Title:_____________________________
KREDIETBANK N.V.,
as a Lender
By:________________________________
Title:_____________________________
SUMITOMO BANK OF CALIFORNIA,
as a Lender
By:________________________________
Title:_____________________________
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<PAGE>
TICKETMASTER GROUP, INC.
FIFTH AMENDMENT TO CREDIT AGREEMENT
This FIFTH AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated
as of June 6, 1996 and entered into by and among Ticketmaster Group, Inc., an
Illinois corporation ("BORROWER"), the financial institutions listed on the
signature pages hereof ("LENDERS"), Wells Fargo Bank, National Association, as
agent for Lenders ("AGENT"), and the undersigned Guarantors (for purposes of
Section 4 hereof only), and is made with reference to that certain Credit
Agreement, dated as of November 18, 1994, as amended by the First Amendment to
Credit Agreement, dated as of January 6, 1995, the Second Amendment to Credit
Agreement, dated as of January 30, 1995, the Third Amendment and Limited Waiver
to Credit Agreement and Amendment to Guarantor Pledge Agreement, dated as of
April 7, 1995, the Fourth Amendment and Limited Waiver to Credit Agreement,
Amendment to Guarantor Pledge Agreement and Amendment to Third Party Pledge
Agreement, dated as of August 28, 1995, and the Waiver Dated as of April 30,
1996 to Credit Agreement (as so amended, the "CREDIT AGREEMENT"), by and among
Borrower, the Lenders and Agent. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
A. Pursuant to (i) that certain Sale and Purchase Agreement (the
"SALE AND PURCHASE AGREEMENT") by and among TM Overseas, Inc., a Delaware
corporation ("TM OVERSEAS"), Warner Music International Services Limited, an
English company ("WARNER INTERNATIONAL"), and Ticketmaster UK Limited, an
English company ("TICKETMASTER UK"), and (ii) that certain Purchase Agreement by
and between TM Overseas and Warner Music Ticketing, Inc., a Delaware corporation
("WARNER TICKETING"), and various related documents (i.e., the Registration
Rights Agreement, Limited Guaranty and certain proceeds sharing letter) TM
Overseas will acquire a 50% interest in each of Ticketmaster UK, and
Ticketmaster Europe Group, a Delaware joint venture ("TICKETMASTER EG"),
respectively, and, following the consummation of such acquisitions, TM Overseas
will own all of the equity interests in each of Ticketmaster UK and Ticketmaster
EG (collectively, the "ACQUISITION").
B. In connection with the Sale and Purchase Agreement, TM Overseas
has agreed to issue to Warner International an Exchangeable Promissory Note in a
principal amount not to exceed Five Million Dollars ($5,000,000) (the "TM
OVERSEAS PROMISSORY NOTE"). In connection with the issuance of the TM Overseas
Promissory Note, Borrower has agreed to issue that certain Limited Guaranty (the
"LIMITED GUARANTY"), pursuant to which the Borrower will guarantee the full and
prompt payment and performance, when due, of any and all obligations of TM
Overseas under (i) the TM Overseas Promissory Note, (ii) the assumed obligations
of Ticketmaster UK to the Time Warner division of Warner International pursuant
to that certain Loan Note, dated April 1, 1993, made by Ticketmaster UK in favor
of Ticketmaster Corporation and the Time Warner division of Warner International
in the original
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<PAGE>
principal amount of L587,000.00, (iii) the assumed obligations of Ticketmaster
UK to the Time Warner division of Warner International pursuant to that certain
Second Loan Note, dated June 30, 1993, made by Ticketmaster UK to Ticketmaster
Corporation and the Time Warner division of Warner International in the original
principal amount of L150,000.00, and (iv) that certain proceed sharing letter
agreement by and among TM Overseas, Warner International and Warner Ticketing.
Borrower requests that the Credit Agreement be amended to permit the issuance of
the TM Overseas Note and the Limited Guaranty.
C. Under section 2.16 of the Credit Agreement, Ticketmaster
Ticketing Co., Inc., a Delaware corporation ("TM TICKETING"), must guaranty all
of the Obligations (other than Residual Obligations).
D. Under section 2.15(a) of the Credit Agreement, TM Ticketing, as
the owner of all of the capital stock of TM Overseas, is required to pledge and
grant to Agent on behalf of Lenders a first priority Lien on all of its
ownership interests in TM Overseas pursuant to the Guarantor Pledge Agreement,
and under section 2.16 of the Credit Agreement, TM Overseas must guaranty all of
the Obligations (other than Residual Obligations).
E. Under section 2.15(a) of the Credit Agreement, TM Overseas is
required to pledge and grant to Agent on behalf of Lenders a first priority Lien
on all of its ownership interests in Ticketmaster EG pursuant to the Guarantor
Pledge Agreement and Pledge Amendment (as hereinafter defined), and under
section 2.16 of the Credit Agreement, Ticketmaster EG must guaranty all of the
Obligations (other than Residual Obligations).
F. After consideration of various tax issues, Borrower has requested
that Lenders (a) agree not to require that Ticketmaster UK enter into the
Guaranty or the Security Agreement and not require any other Restricted Entity
that is not incorporated, formed or organized under the laws of the United
States or any state thereof to enter into the Guaranty or the Security Agreement
to the extent that entering into such agreements could cause adverse tax
consequences under applicable U.S. tax law and (b) agree that only 65% of the
capital stock of Ticketmaster UK will be pledged as security for the Obligations
under the Guarantor Pledge Agreement and that in the future only 65% of the
capital stock of any Restricted Entity or Unrestricted Entity be pledged to the
extent that such Restricted Entity or Unrestricted Entity is not incorporated,
formed or organized under the laws of the United States or any State thereof to
the extent that a pledge of a greater percentage could cause adverse tax
consequences to Borrower under applicable U.S. tax law.
G. Borrower and Required Lenders desire to amend the Credit
Agreement otherwise as set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as
follows:
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SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO ARTICLE I. Article I of the Credit Agreement is
hereby amended by adding the following definition as Section 2.05:
"SECTION 2.05. "INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter."
1.2 WAIVER OF SECTIONS 2.15 AND 2.16. Agent and Required Lenders
hereby waive Borrower's and each Restricted Entity's compliance with sections
2.15 and 2.16 of the Credit Agreement to the extent that Borrower has not, or
has not caused each Restricted Entity to, pledge ownership interests, as
described therein, to be pledged to Agent on behalf of the Lenders, or to the
extent that Borrower has not caused Guarantors acquired after the effective date
of the Credit Agreement to enter into a Counterpart to Guaranty (hereinafter
defined); PROVIDED that Borrower shall, and shall cause each Restricted Entity
to, comply with the provisions of Sections 2.15 and 2.16 not later than June 21,
1996 and that this Section 1.2 shall not affect the amendments to Sections 2.15
and 2.16 set forth herein or waive or modify any conditions to the Fifth
Amendment Effective Date set forth herein.
1.3 AMENDMENT TO SECTION 2.15: COLLATERAL.
A. SECTION 2.15(a). Section 2.15 of the Credit Agreement is
hereby amended by adding the following proviso at the end of the first sentence
in subsection 2.15(a) thereof:
"; PROVIDED, that in the event any such Restricted Entity is not
incorporated, formed or organized under the laws of the United States or
any State thereof and the pledge of a greater percentage of the stock of
such Restricted Entity would constitute an investment of earnings in United
States property under Section 956 (or a successor provision) of the
Internal Revenue Code which investment would trigger an increase in gross
income of Borrower pursuant to Section 951 (or a successor provision) of
the Internal Revenue Code, Borrower shall, and shall cause each Restricted
Entity to, pledge and grant to Agent on behalf of the Lenders only 65% of
the stock of such Restricted Entity as security for the Obligations, upon
such terms and conditions as Agent may deem appropriate."
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B. SECTION 2.15(d). Section 2.15 is hereby further amended by
adding the following proviso at the end of section 2.15(d) thereof:
"; PROVIDED, that in the event any such Unrestricted Entity is not
incorporated, formed or organized under the laws of the United States or
any State thereof and the pledge of all of the stock of such Restricted
Entity would constitute an investment of earnings in United States property
under Section 956 (or a successor provision) of the Internal Revenue Code
which investment would trigger an increase in gross income of Borrower
pursuant to Section 951 (or a successor provision) of the Internal Revenue
Code, Borrower shall, and shall cause each Restricted Entity to, pledge and
grant to Agent on behalf of the Lenders only 65% of the stock of such
Unrestricted Entity as security for the Obligations, upon such terms and
conditions as Agent may deem appropriate."
1.4 AMENDMENT TO SECTION 2.16: GUARANTIES. Section 2.16 of the
Credit Agreement is hereby amended by adding the following proviso at the end
thereof:
"; PROVIDED, that in the event any Restricted Subsidiary is not
incorporated, formed or organized under the laws of the United States or
any State thereof and the guaranty by such Restricted Subsidiary of the
Obligations would constitute an investment of earnings in United States
property under Section 956 (or a successor provision) of the Internal
Revenue Code which investment would trigger an increase in gross income of
Borrower pursuant to Section 951 (or a successor provision) of the Internal
Revenue Code, such Restricted Subsidiary shall not be required to guaranty
the Obligations and shall not be a Guarantor hereunder."
1.5 AMENDMENT TO SECTION 6.4: OTHER INDEBTEDNESS. Section 6.4 of the
Credit Agreement is hereby amended by deleting the word "and" immediately
preceding clause (h) thereof and substituting therefor a comma (,) and by adding
the following clause (i) at the end thereof:
"and (i) liabilities of TM Overseas, Inc., a Delaware corporation and
subsidiary of Borrower ("TM OVERSEAS"), under (A) an Exchangeable
Promissory Note in a principal amount not to exceed FIVE MILLION DOLLARS
($5,000,000), as the same may be amended from time to time, (B) the
assumption of the obligations of Ticketmaster UK Limited, an English
company ("TICKETMASTER UK"), to the Time Warner division Warner Music
International Services Limited, an English company ("WARNER
INTERNATIONAL"), pursuant to that certain Loan Note, dated April 1, 1993,
made by Ticketmaster UK in favor of Ticketmaster Corporation and the Time
Warner division of Warner International in the original principal amount of
L587,000.00, (C) the obligations of Ticketmaster UK to the Time Warner
division of Warner International pursuant to that certain Second Loan Note,
dated June 30, 1993, made by Ticketmaster UK to Ticketmaster Corporation
and the Time Warner division of Warner International in the original
principal amount of L150,000.00, and (D) that certain
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proceed sharing letter agreement among TM Overseas, Warner International,
Warner Music Ticketing, Inc., a Delaware corporation, a copy of which has
been delivered to Agent prior to the date hereof."
1.6 AMENDMENT TO SECTION 6.7: GUARANTIES. Section 6.7 of the Credit
Agreement is hereby amended by deleting the word "and" immediately preceding
clause (f) thereof and substituting therefor a comma (,) and by adding the
following clause (g) at the end thereof:
"and (g) unsecured guaranties given by Borrower of the indebtedness and
other obligations permitted under Section 6.4(i) hereof."
1.7 WAIVER OF ARTICLES IV, V AND VI. Required Lenders hereby waive
the provisions of Articles IV, V and VI of the Credit Agreement to the extent
necessary (without regard to any exception or basket which may be provided for
therein) to permit TM Overseas to enter into and consummate the Acquisition and
other related transactions pursuant thereto, and permit the Borrower, pursuant
to the Limited Guaranty, to guaranty the obligations of TM Overseas incurred in
connection with the Acquisition; PROVIDED that nothing in this subsection 1.7
shall be deemed to amend or waive Sections 6.4 and 6.7, or to amend or waive the
application of Articles IV, V and VI of the Credit Agreement to the Borrower and
its Subsidiaries, including TM Ticketing, TM Overseas, Ticketmaster UK and
Ticketmaster EG, after giving effect to the Acquisition or relating to any
transaction, event or condition other than to permit the entry into and
consummation of the Acquisition.
1.8 AMENDMENT TO SECTION 8.1(d): NATURE OF AGENT'S DUTIES. Section
8.1(d) of the Credit Agreement is hereby amended by deleting the third sentence
thereof.
1.9 AMENDMENT OF SCHEDULES
A. SCHEDULE A: LENDERS. SCHEDULE A to the Credit Agreement is
hereby amended by deleting said SCHEDULE A in its entirety and substituting in
place thereof a new SCHEDULE A in the form of ANNEX A to this Amendment.
B. SCHEDULE 9.2: LENDERS' NOTICE ADDRESSES. SCHEDULE 9.2 to the
Credit Agreement is hereby amended by deleting said SCHEDULE 9.2 in its entirety
and substituting in place thereof a new SCHEDULE 9.2 in the form of ANNEX B to
this Amendment.
SECTION 2. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "FIFTH AMENDMENT EFFECTIVE
DATE"):
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A. On or before the Fifth Amendment Effective Date, Borrower shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the Fifth Amendment Effective Date:
1. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Amendment, certified as of
the Fifth Amendment Effective Date by its corporate secretary or an
assistant secretary as being in full force and effect without modification
or amendment;
2. Signature and incumbency certificates of its officers executing
this Amendment; and
3. Executed copies of this Amendment.
B. On or before the Fifth Amendment Effective Date, Ticketmaster
Corporation shall pledge and deliver to Agent for the benefit of Lenders all
share certificates evidencing its ownership interest in TM Ticketing and shall
supplement the Schedule A to the Guarantor Pledge Agreement, such supplement in
substantially the form attached hereto as ANNEX F (which Schedule shall
hereafter include such supplements), setting forth the information necessary to
make such Schedule true, correct and complete and not misleading, and
Ticketmaster Corporation shall also deliver to Agent for filing pursuant to the
Security Agreement properly executed financing statements under the Uniform
Commercial Code (or any equivalent or similar legislation) in form and substance
satisfactory to Agent in California and each other jurisdiction as may be
necessary to perfect the security interests in the Collateral (as defined in the
Security Agreement).
C. On or before the Fifth Amendment Effective Date, TM Ticketing shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the Fifth Amendment Effective Date:
1. Resolutions of its Board of Directors (i) approving and
authorizing the execution, delivery and performance of that certain
Counterpart to Guaranty, of even date herewith in substantially the form
attached hereto as ANNEX C (the "COUNTERPART GUARANTY"), (ii) approving and
authorizing the execution, delivery and performance of that certain
Counterpart and Acknowledgment to Guarantor Pledge Agreement, of even date
herewith in substantially the form attached hereto as ANNEX D (the
"COUNTERPART GUARANTOR PLEDGE AGREEMENT"), and (iii) approving and
authorizing the execution, delivery and performance of that certain
Counterpart and Acknowledgement To Security Agreement, of even date
herewith in substantially the form attached hereto as ANNEX E (the
"COUNTERPART SECURITY AGREEMENT"), certified as of the Fifth Amendment
Effective Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
6
<PAGE>
2. Signature and incumbency certificates of its officers executing
the Counterpart Guaranty, the Counterpart Guarantor Pledge Agreement and
the Counterpart Security Agreement; and
3. Executed copies of the Counterpart Guaranty, Counterpart
Guarantor Pledge Agreement and Counterpart Security Agreement.
D. On or before the Fifth Amendment Effective Date, TM Ticketing shall
pledge and deliver to Agent for the benefit of Lenders all share certificates
evidencing its ownership interest in TM Overseas, and TM Ticketing shall also
deliver to Agent for filing pursuant to the Security Agreement properly executed
financing statements under the Uniform Commercial Code (or any equivalent or
similar legislation) in form and substance satisfactory to Agent in California
and each other jurisdiction as may be necessary to perfect the security
interests in the Collateral (as defined in the Security Agreement).
E. On or before the Fifth Amendment Effective Date, TM Overseas shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the Fifth Amendment Effective Date:
1. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of the Counterpart Guaranty, the
Counterpart Guarantor Pledge Agreement and the Counterpart Security
Agreement, certified as of the Fifth Amendment Effective Date by its
corporate secretary or an assistant secretary as being in full force and
effect without modification or amendment;
2. Signature and incumbency certificates of its officers executing
the Counterpart Guaranty, the Counterpart Guarantor Pledge Agreement and
the Counterpart Security Agreement; and
3. Executed copies of the Counterpart Guaranty, Counterpart
Guarantor Pledge Agreement and Counterpart Security Agreement.
F. On or before the Fifth Amendment Effective Date, TM Overseas shall
pledge and deliver to Agent for the benefit of the Lenders all share
certificates representing its ownership interests in each of Ticketmaster EG and
Ticketmaster UK; PROVIDED, HOWEVER, that pursuant to the terms of Section 2.15
of the Amended Agreement (hereinafter defined) TM Overseas shall pledge only 65%
of the stock of Ticketmaster UK to Agent for the benefit of the Lenders as
security for the Obligations, upon such terms and conditions as Agent may deem
appropriate, and shall also deliver to Agent for filing pursuant to the Security
Agreement properly executed financing statements under the Uniform Commercial
Code (or any equivalent or similar legislation) in form and substance
satisfactory to Agent in California and each other jurisdiction as may be
necessary to perfect the security interests in the Collateral (as defined in the
Security Agreement).
7
<PAGE>
G. On or before the Fifth Amendment Effective Date, Ticketmaster EG shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the Fifth Amendment Effective Date:
1. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of the Counterpart Guaranty, the
Counterpart Guarantor Pledge Agreement and the Counterpart Security
Agreement;
2. Signature and incumbency certificates of its officers executing
the Counterpart Guaranty, the Counterpart Guarantor Pledge Agreement and
the Counterpart Security Agreement; and
3. Executed copies of the Counterpart Guaranty, the Counterpart
Guarantor Pledge Agreement and the Counterpart Security Agreement.
H. Ticketmaster EG shall deliver to Agent for filing pursuant to the
Security Agreement properly executed financing statements under the Uniform
Commercial Code (or any equivalent or similar legislation) in form and substance
satisfactory to Agent in California and each other jurisdiction as may be
necessary to perfect the security interests in the Collateral (as defined in the
Security Agreement).
I. On or before the Fifth Amendment Effective Date, Agent shall have
received from Required Lenders executed copies of this Amendment.
J. On or before the Fifth Amendment Effective Date, Agent shall have
received originally executed copies of one or more favorable opinions from Neal
Gerber and Eisenberg, counsel to Borrower and Guarantors, in form and substance
reasonably satisfactory to Agent and its counsel, dated as of the Fifth
Amendment Effective Date with respect to the enforceability of the Amended
Agreement (as hereinafter defined), the enforceability of the Counterpart
Guaranty, the Counterpart Guarantor Pledge Agreement and Counterpart Security
Agreement, as executed by the appropriate parties, and as to such other matters
as Agent acting on behalf of Lenders may reasonably request.
K. On or before the Fifth Amendment Effective Date, Borrower shall
deliver to Agent a list of Restricted Subsidiaries, Unrestricted Subsidiaries
and other corporations in which the Borrower directly or indirectly owns an
interest as of the date hereof, the percentage of the outstanding shares of each
such class owned (directly or indirectly) by Borrower or one or more Restricted
Subsidiaries or Unrestricted Subsidiaries, and any outstanding options,
warrants, rights of conversion or purchase and other similar rights both in
total and held by Borrower or one or more Restricted Subsidiaries or
Unrestricted Subsidiaries.
8
<PAGE>
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment, Borrower
represents and warrants to each Lender that the following statements are
true, correct and complete:
A. CORPORATE POWER AND AUTHORITY. Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out
the transactions contemplated by, and perform its obligations under, the
Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment has been duly authorized by all necessary corporate action on the
part of Borrower.
C. NO CONFLICT. The execution, delivery and performance by Borrower
of this Amendment, does not violate any provision of any law or regulation
applicable to Borrower the violation of which could reasonably be expected
to have a Material Adverse Effect, or contravene any provision of
Borrower's articles of incorporation or by-laws, or result in or constitute
a Defined Default under any contract, obligation, indenture or other
instrument to which Borrower is a party or by which Borrower may be bound
which default could reasonably be expected to have a Material Adverse
Effect.
D. GOVERNMENTAL CONSENTS. No Governmental Approval is required in
connection with the execution, delivery and performance by Borrower of this
Amendment and the performance by Borrower of the Amended Agreement or to
ensure the legality, validity or enforceability hereof or thereof.
E. BINDING OBLIGATION. This Amendment has been duly executed and
delivered by Borrower, and this Amendment and the Amended Agreement are the
legally valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of
the Credit Agreement and in the other Loan Documents are and will be true,
correct and complete in all material respects on and as of the Fifth
Amendment Effective Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. Upon giving effect to this Amendment, no
event has occurred and is continuing or will result from the consummation
of the transactions
9
<PAGE>
contemplated by this Amendment that would constitute an Event of Default or a
Potential Event of Default.
SECTION 4. ACKNOWLEDGEMENT AND CONSENT
Guarantors are parties to the Guaranty, the Guarantor Pledge Agreement
(in the case of certain Guarantors), the Security Agreement dated as of
March 31, 1995 and as the same may be amended from time to time (the "SECURITY
AGREEMENT") by the Guarantors named therein (in the case of certain Guarantors)
and the Second Amended and Restated Trademark Mortgage Agreement dated as of
March 31, 1995 (the "TRADEMARK AGREEMENT") between Ticketmaster Corporation and
Agent (in the case of Ticketmaster Corporation) pursuant to which each Guarantor
has guarantied the Obligations on the terms (and to the extent) set forth in the
Guaranty and certain Guarantors have created Liens in favor of Agent on certain
Collateral to secure the Obligations on the terms (and to the extent) set forth
in the Guarantor Pledge Agreement, the Security Agreement and the Trademark
Agreement. The Guaranty, the Guarantor Pledge Agreement, the Security Agreement
and the Pledge Agreement are collectively referred to herein as the "GUARANTOR
DOCUMENTS."
Each Guarantor hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each
Guarantor hereby confirms that each Guarantor Document to which it is a party or
otherwise bound and all Collateral encumbered thereby will continue to guaranty
or secure, as the case may be, to the fullest extent possible in accordance with
the applicable provisions of the Guarantor Documents the payment and performance
of all guarantied or secured obligations.
Each Guarantor acknowledges and agrees that any of the Guarantor
Documents to which it is a party or otherwise bound shall continue in full force
and effect and that all of its obligations thereunder shall be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Guarantor represents and warrants that
all representations and warranties contained in the Guarantor Documents to which
it is a party or otherwise bound are true, correct and complete in all material
respects on and as of the Fifth Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
Each Guarantor acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Guarantor is not
required by the terms of the Credit Agreement or any other Loan Document to
consent to the amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other
Loan Document shall be deemed to require the consent of such Guarantor to any
future amendments to the Credit Agreement.
10
<PAGE>
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Fifth Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Borrower acknowledges that all reasonable
cost, fees and expenses as described in subsection 9.3 of the Credit Agreement
incurred by Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of the
Borrower.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
TICKETMASTER GROUP, INC.,
an Illinois corporation
By:
--------------------------------
Title:
----------------------------
EXISTING GUARANTORS (FOR THE PURPOSES OF SECTION 4
ONLY):
TICKETMASTER CORPORATION,
AN ILLINOIS CORPORATION
TICKETMASTER-SOUTHERN
CALIFORNIA, INC., A CALIFORNIA
CORPORATION
TICKETMASTER-ARIZONA, INC., AN
ARIZONA CORPORATION
TICKETMASTER CORPORATION OF
WASHINGTON, A WASHINGTON
CORPORATION
TICKETMASTER-COLORADO, INC., A
COLORADO CORPORATION
TICKETMASTER-INDIANA, INC., AN
INDIANA CORPORATION
TICKETMASTER-GEORGIA, INC., A
GEORGIA CORPORATION
TICKETMASTER-CHICAGO, INC., AN
ILLINOIS CORPORATION
TICKETMASTER-MIDWEST, INC., A
MINNESOTA CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-1
<PAGE>
TICKETMASTER ADVERTISING
COMPANY, AN ILLINOIS CORPORATION
TMC CONSULTANTS, INC., AN
ILLINOIS CORPORATION
TICKETMASTER-TENNESSEE, INC., A
TENNESSEE CORPORATION
TICKETMASTER-LAS VEGAS, INC., A
NEVADA CORPORATION
TMNY HOLDINGS, INC., A NEW YORK
CORPORATION
TICKETMASTER-NEW YORK, INC., A
DELAWARE CORPORATION
TICKETMASTER-MICHIGAN, INC., A
MICHIGAN CORPORATION
TICKETMASTER FLORIDA
MANAGEMENT CORPORATION, A
FLORIDA CORPORATION
TICKETMASTER EUROPE, INC.,
A DELAWARE CORPORATION
TICKETMASTER-TEXAS MANAGEMENT
CORPORATION, A DELAWARE
CORPORATION
ENTERTAINMENT STRATEGIES, LTD.,
A CALIFORNIA CORPORATION
TICKETMASTER-NEW ORLEANS, INC.,
A LOUISIANA CORPORATION
TICKETMASTER CORPORATION,
A DELAWARE CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Chief Financial Officer
and Treasurer
S-2
<PAGE>
NEW GUARANTORS (FOR THE PURPOSES OF SECTION 4
ONLY)
TICKETMASTER TICKETING CO., INC., A
DELAWARE CORPORATION
TM OVERSEAS, INC., A
DELAWARE CORPORATION
TICKETMASTER EUROPE GROUP, A
DELAWARE JOINT VENTURE
By:
-------------------------------
Peter B. Knepper
Its: Senior Vice President and
Chief Financial Officer
LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually as a Lender and as Agent
By:
-------------------------------
Title:
----------------------------
U.S. BANK OF WASHINGTON, N.A.,
as a Lender
By:
-------------------------------
Title:
----------------------------
BANQUE NATIONALE DE PARIS,
as a Lender
By:
-------------------------------
Title:
----------------------------
S-3
<PAGE>
FIRST BANK NATIONAL ASSOCIATION,
as a Lender
By:
-------------------------------
Title:
----------------------------
CITY NATIONAL BANK,
as a Lender
By:
-------------------------------
Title:
----------------------------
THE NIPPON CREDIT BANK, LTD., LOS ANGELES AGENCY,
as a Lender
By:
-------------------------------
Title:
----------------------------
SEATTLE FIRST NATIONAL BANK,
as a Lender
By:
-------------------------------
Title:
----------------------------
KREDIETBANK N.V.,
as a Lender
By:
-------------------------------
Title:
----------------------------
S-4
<PAGE>
SUMITOMO BANK OF CALIFORNIA,
as a Lender
By:
-------------------------------
Title:
----------------------------
S-5
<PAGE>
ANNEX A
RESTATEMENT OF SCHEDULE A
SCHEDULE A
LENDERS AND PRO RATA SHARES
LENDER PRO RATA SHARE
Wells Fargo Bank, N.A. 34.857142851%
First Bank National Association 14.28571429%
Seattle First National Bank 11.428571428%
U.S. Bank of Washington, N.A. 8.57142857%
The Nippon Credit Bank, Ltd.,
Los Angeles Agency 8.57142857%
Banque Nationale de Paris 5.14285714%
City National Bank 2.85714286%
Kredietbank N.V. 8.571428571%
Sumitomo Bank of California 5.714285714%
A-1
<PAGE>
ANNEX B
SCHEDULE 9.2
NOTICE ADDRESSES FOR
LENDERS (OTHER THAN WELLS FARGO)
U.S. Bank of Washington, N.A.
10800 NE 8th Street
Suite 1000
Bellevue, WA 98004
(206) 450-5918
FAX: (206) 450-5989
Attention: Ann Caldwell
First Bank National Association
601 Second Avenue
Minneapolis, MN 55402-4302
(612) 973-1819
FAX: (612) 973-0824
Attention: Robert W. Miller
City National Bank
400 North Roxbury Drive
4th Floor
Beverly Hills, CA 90210
(310) 888-6208
FAX: (310) 888-6159
Attention: Norman Starr
B-1
<PAGE>
Banque Nationale de Paris
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
(213) 488-9120
FAX: (213) 488-9602
Attention: Janice Ho
The Nippon Credit Bank, Ltd., Los Angeles Agency
550 South Hope Street, #2500
Los Angeles, California 90071
(213) 243-5711
FAX: (213) 892-0111
Attention: Julien Michaels
Seattle First National Bank
Metropolitan Com. Bkg. - Team #3
701 5th Avenue, Floor 11
Seattle, Washington 98104
P.O. Box C-34997
Seattle, Washington 98124
FAX: (206) 358-124
Attention: Joyce Hackett
Kredietbank N.V.
125 W. 55th Street, 10th Floor
New York, New York 10019
(212) 541-0657 or -0658
Fax: (212) 956-5580 or -5581
Attention: Lynda Resuma or Mayra Ramirez
Sumitomo Bank of California
611 W. 6th Street, #3900
Los Angeles, California 90017
(213) 362-5718 or -5727
Fax: (213) 622-1385
Attention: Robert M. Iritani or Joyce Knox
B-2
<PAGE>
ANNEX C
FORM OF COUNTERPART TO GUARANTY
This COUNTERPART TO GUARANTY (this ``COUNTERPART'') is dated as of June 6,
1996 and is made with reference to that certain Guaranty, dated as of
November 18, 1994, a copy of which is annexed hereto (as amended, restated,
supplemented or modified or as it may in the future be amended, restated,
supplemented or otherwise modified from time to time, the ``GUARANTY'';
capitalized terms used herein without definition shall have the respective
meanings set forth in the Guaranty), executed by each of the Guarantors as
defined therein (each being a ``Guarantor'' thereunder and a Restricted
Subsidiary as defined in the Credit Agreement), in favor of Wells Fargo Bank,
National Association, as Agent under the Credit Agreement. Pursuant to Section
21 of the Guaranty, Ticketmaster Ticketing Co., Inc., a Delaware corporation, TM
Overseas, Inc., a Delaware corporation, and Ticketmaster Europe Group, a
Delaware joint venture (each such corporation or joint venture, a ``NEW
SUBSIDIARY''), being Restricted Subsidiaries, acknowledge that as of the date
hereof each New Subsidiary shall be a Guarantor for all purposes under the
Guaranty and hereby agrees to be bound by all of the terms and conditions of the
Guaranty to the same extent as if it were an original signatory thereof.
Without limiting the foregoing, each New Subsidiary hereby jointly and severally
irrevocably and unconditionally guaranties, as primary obligor and not merely as
surety, the due and punctual payment in full of Borrower's Indebtedness when the
same shall become due in accordance with the terms thereof whether at stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including, without limitation, amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. Section 362(a) or any successor provision thereto).
Each New Subsidiary hereby represents and warrants to Agent that the
representations and warranties applicable to such New Subsidiary under the
Guaranty are true, correct and complete in all material respects to the same
extent as though made on and as of the date hereof, and as of the Counterpart
Effective Date (as defined below), except to the extent such representations and
warranties specifically relate to an earlier date, in which case they are true,
correct and complete in all material respects as of such earlier date.
THIS COUNTERPART SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
This Counterpart may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached
C-1
<PAGE>
to a single counterpart so that all signature pages are physically attached to
the same document and, pursuant to the terms of the Guaranty, all such
counterparts shall be attached to, and be a part of, the Guaranty.
This Counterpart shall become effective (such date being the ``COUNTERPART
EFFECTIVE DATE'') upon the execution of a counterpart hereof by each of the
parties hereto and receipt by Agent of written or telephone notification of such
execution and authorization of delivery thereof.
[Remainder of page intentionally left blank.]
C-2
<PAGE>
IN WITNESS WHEREOF, each New Subsidiary has caused this Counterpart to be
duly executed and delivered by its officer thereunto duly authorized as of the
first date written above.
TICKETMASTER TICKETING CO., INC.,
A DELAWARE CORPORATION
By:
------------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
TM OVERSEAS, INC.,
A DELAWARE CORPORATION
By:
------------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
TICKETMASTER EUROPE GROUP,
A DELAWARE JOINT VENTURE
By:
------------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
C-3
<PAGE>
ANNEX D
FORM OF GUARANTOR PLEDGE AMENDMENT
This GUARANTOR PLEDGE AMENDMENT (this ``PLEDGE AMENDMENT'') is dated
as of June 6, 1996 and is made with reference to that certain Guarantor Pledge
Agreement, dated as of November 18, 1994 (as previously amended, restated,
supplemented or modified and as it may hereafter be amended, restated,
supplemented or otherwise modified from time to time, the ``GUARANTOR PLEDGE
AGREEMENT''; capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Guarantor Pledge Agreement), executed
and delivered by the Debtors named therein (each an ``EXISTING DEBTOR" and
collectively, the ``EXISTING DEBTORS''), as debtors in favor of Wells Fargo
Bank, National Association, as Agent for the Lenders (``AGENT'').
By execution of this Pledge Amendment, each of Ticketmaster Ticketing Co.,
Inc., a Delaware corporation, TM Overseas, Inc., a Delaware corporation, and
Ticketmaster Europe Group, a Delaware joint venture (each such corporation or
joint venture, a ``NEW DEBTOR''), becomes a party to the Guarantor Pledge
Agreement as a Debtor for all purposes thereunder and under the other Loan
Documents and hereby assigns, transfers to, pledges with and grants a first
priority security interest to Agent all of its right, title and interest in and
to the Collateral, including without limitation the Collateral delivered to
Agent and set forth on SCHEDULE A attached hereto, together with the Proceeds,
and in the event that such New Debtor receives any such Proceeds, such New
Debtor will hold the same in trust on behalf of and for the benefit of Agent and
will immediately deliver all such Proceeds to Agent in the exact form received,
with the endorsement of such New Debtor if necessary and/or appropriate undated
stock powers duly executed in blank, to be held by Agent as a part of the
Collateral, subject to all terms hereof and the Guarantor Pledge Agreement.
Annexed hereto as SCHEDULE A is a supplement to the Schedule for the
Guarantor Pledge Agreement (which Schedule shall hereafter include such
supplements), setting forth the information necessary to make such Schedule
true, correct and complete and not misleading as a result of the addition of
each New Debtor as a Debtor thereunder.
Each New Debtor hereby represents and warrants to Agent that the
representations and warranties applicable to such New Debtor under the Guarantor
Pledge Agreement, as supplemented by the Schedule annexed hereto, are true,
correct and complete in all material respects to the same extent as though made
on and as of the date hereof, and as of the Pledge Amendment Effective Date (as
defined below), except to the extent such representations and warranties
specifically relate to an earlier date, in which case they are true, correct and
complete in all material respects as of such earlier date.
THIS PLEDGE AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
D-1
<PAGE>
OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Pledge Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document and, pursuant to the terms of the Guarantor Pledge Agreement, all such
counterparts shall be attached to, and be a part of, the Guarantor Pledge
Agreement.
This Pledge Amendment shall become effective (such date being the ``PLEDGE
AMENDMENT EFFECTIVE DATE'') upon the execution of a counterpart hereof by each
of the parties hereto and receipt by Agent of written or telephone notification
of such execution and authorization of delivery thereof.
[Remainder of page intentionally left blank.]
D-2
<PAGE>
IN WITNESS WHEREOF, each New Debtor has caused this Pledge Amendment to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first written above.
TICKETMASTER TICKETING CO., INC.,
A DELAWARE CORPORATION
By:
-------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
TM OVERSEAS, INC.,
A DELAWARE CORPORATION
By:
------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
TICKETMASTER EUROPE GROUP,
A DELAWARE JOINT VENTURE
By:
-------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
D-3
<PAGE>
ACKNOWLEDGMENT. Each of the undersigned Debtors hereby consents to this
Pledge Amendment and agrees that each Loan Document to which it is a party shall
continue in full force and effect and shall be valid and enforceable, is hereby
ratified and confirmed and shall not be impaired or limited by the execution and
delivery of this Pledge Amendment.
DEBTORS:
TICKETMASTER CORPORATION,
AN ILLINOIS CORPORATION
TICKETMASTER-SOUTHERN
CALIFORNIA, INC., A CALIFORNIA
CORPORATION
TICKETMASTER-ARIZONA, INC.,
AN ARIZONA CORPORATION
TICKETMASTER FLORIDA MANAGEMENT
CORPORATION, A FLORIDA CORPORATION
TICKETMASTER-COLORADO, INC.,
A COLORADO CORPORATION
TICKETMASTER-CHICAGO, INC.,
AN ILLINOIS CORPORATION
TICKETMASTER-MIDWEST, INC.,
A MINNESOTA CORPORATION
TICKETMASTER ADVERTISING COMPANY,
AN ILLINOIS CORPORATION
TMC CONSULTANTS, INC.
AN ILLINOIS CORPORATION
TICKETMASTER-LAS VEGAS, INC.,
A NEVADA CORPORATION
TMNY HOLDINGS, INC.,
A NEW YORK CORPORATION
TICKETMASTER-NEW YORK, INC.,
A DELAWARE CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Senior Vice President and
Chief Financial Officer
D-4
<PAGE>
TICKETMASTER-MICHIGAN, INC.,
A MICHIGAN CORPORATION
TICKETMASTER-TEXAS MANAGEMENT
CORPORATION, A DELAWARE CORPORATION
ENTERTAINMENT STRATEGIES, LTD.,
A CALIFORNIA CORPORATION
TICKETMASTER CORPORATION,
A DELAWARE CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Senior Vice President and
Chief Financial Officer
ACKNOWLEDGED:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent
By:
------------------------------------
Cindy Sullivan
Its: Regional Vice President
D-5
<PAGE>
SCHEDULE A
TO GUARANTOR PLEDGE AMENDMENT
<TABLE>
<CAPTION>
<S><C>
DEBTOR'S
NUMBER CERT. NAME IN WHICH PERCENTAGE JURISDICTION OF
ISSUER OF SHARES CLASS NUMBER(S) CERT. ISSUED OWNERSHIP INCORPORATION
</TABLE>
D-6
<PAGE>
ANNEX E
FORM OF COUNTERPART AND ACKNOWLEDGMENT
TO SECURITY AGREEMENT
This COUNTERPART AND ACKNOWLEDGMENT TO SECURITY AGREEMENT (this
``COUNTERPART'') is dated as of June 6, 1996 and is made with reference to that
certain Security Agreement, dated as of March 31, 1995 (as previously amended,
restated, supplemented or modified and as it may hereafter be amended, restated,
supplemented or otherwise modified from time to time, the ``SECURITY
AGREEMENT''; capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Security Agreement), executed and
delivered by the Debtors named therein (each an ``EXISTING DEBTOR" and
collectively, the ``EXISTING DEBTORS''), as debtors in favor of Wells Fargo
Bank, National Association, as Agent for the Lenders.
By execution of this Counterpart, Ticketmaster Ticketing Co., Inc., a
Delaware corporation, TM Overseas, Inc., a Delaware corporation, and
Ticketmaster Europe Group, a Delaware joint venture (each such corporation or
joint venture, a ``NEW DEBTOR'') becomes a party to the Security Agreement as a
Debtor for all purposes thereunder and under the other Loan Documents and is
jointly and severally liable for all obligations of the Debtors that are
Subsidiaries of Borrower to the full extent set forth therein. Without limiting
the foregoing, as security for its respective obligations, each New Debtor
hereby grants and transfers to Agent for the Lenders, a security interest in all
of such New Debtor's right, title and interest in and to the Collateral whether
now owned or hereafter existing or in which New Debtor now has or hereafter
acquires an interest and wherever the same shall be located and all proceeds
thereof.
Annexed hereto is a supplement to the Schedule for the Security Agreement
(which Schedule shall hereafter include such supplements), setting forth the
information necessary to make such Schedule true, correct and complete and not
misleading as a result of the addition of each New Debtor as a Debtor
thereunder.
Each New Debtor hereby represents and warrants to Agent that the
representations and warranties applicable to such New Debtor under the Security
Agreement, as supplemented by the Schedule annexed hereto, are true, correct and
complete in all material respects to the same extent as though made on and as of
the date hereof, and as of the Counterpart Effective Date (as defined below),
except to the extent such representations and warranties specifically relate to
an earlier date, in which case they are true, correct and complete in all
material respects as of such earlier date.
THIS COUNTERPART SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
E-1
<PAGE>
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
This Counterpart may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document and, pursuant to the terms of the Security Agreement, all such
counterparts shall be attached to, and be a part of, the Security Agreement.
This Counterpart shall become effective (such date being the ``COUNTERPART
EFFECTIVE DATE'') upon the execution of a counterpart hereof by each of the
parties hereto and receipt by Agent of written or telephone notification of such
execution and authorization of delivery thereof.
[Remainder of page intentionally left blank.]
E-2
<PAGE>
IN WITNESS WHEREOF, each New Debtor has caused this Counterpart to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first written above.
TICKETMASTER TICKETING CO., INC.,
A DELAWARE CORPORATION
By:
-------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
TM OVERSEAS, INC.,
A DELAWARE CORPORATION
By:
-------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
TICKETMASTER EUROPE GROUP,
A DELAWARE JOINT VENTURE
By:
-------------------------------
Peter B. Knepper
Title: Senior Vice President and
Chief Financial Officer
E-3
<PAGE>
ACKNOWLEDGMENT. Each of the undersigned Debtors hereby consents to this
Counterpart and agrees that each Loan Document to which it is a party shall
continue in full force and effect and shall be valid and enforceable, is hereby
ratified and confirmed and shall not be impaired or limited by the execution and
delivery of this Counterpart.
DEBTORS:
TICKETMASTER CORPORATION,
AN ILLINOIS CORPORATION
TICKETMASTER-SOUTHERN
CALIFORNIA, INC., A CALIFORNIA
CORPORATION
TICKETMASTER-ARIZONA, INC.,
AN ARIZONA CORPORATION
TICKETMASTER FLORIDA MANAGEMENT
CORPORATION, A FLORIDA CORPORATION
TICKETMASTER-COLORADO, INC., A
COLORADO CORPORATION
TICKETMASTER-CHICAGO, INC.,
AN ILLINOIS CORPORATION
TICKETMASTER-MIDWEST, INC.,
A MINNESOTA CORPORATION
TICKETMASTER ADVERTISING COMPANY,
AN ILLINOIS CORPORATION
TMC CONSULTANTS, INC.,
AN ILLINOIS CORPORATION
TICKETMASTER-LAS VEGAS, INC.,
A NEVADA CORPORATION
TMNY HOLDINGS, INC.,
A NEW YORK CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Senior Vice President and
Chief Financial Officer
E-4
<PAGE>
TICKETMASTER-NEW YORK, INC.,
A DELAWARE CORPORATION
TICKETMASTER-MICHIGAN, INC.,
A MICHIGAN CORPORATION
TICKETMASTER-TEXAS MANAGEMENT
CORPORATION, A DELAWARE
CORPORATION
ENTERTAINMENT STRATEGIES, LTD.,
A CALIFORNIA CORPORATION
TICKETMASTER CORPORATION,
A DELAWARE CORPORATION
TICKETMASTER GROUP, INC., AN
ILLINOIS CORPORATION
By:
-------------------------------
Peter B. Knepper
Its: Senior Vice President and
Chief Financial Officer
ACKNOWLEDGED:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent
By:
-------------------------------
Cindy Sullivan
Its: Regional Vice President
E-5
<PAGE>
ANNEX F
SUPPLEMENT
TO
SCHEDULE A
TO
GUARANTOR PLEDGE AGREEMENT
<TABLE>
<CAPTION>
<S><C>
DEBTOR'S
NUMBER OF CERTIFICATE NAME IN WHICH PERCENTAGE JURISDICTION OF
ISSUER SHARES CLASS NUMBER(S) CERTIFICATE ISSUED OWNERSHIP INCORPORATION
</TABLE>
F-1
<PAGE>
THIRD PARTY PLEDGE AGREEMENT
For valuable consideration, the undersigned (the "Pledgor"), hereby
represents, warrants and agrees to the following:
1. GRANT OF SECURITY INTEREST. Pledgor hereby assigns, transfers
to, pledges with and grants a security interest to, WELLS FARGO BANK, NATIONAL
ASSOCIATION, as agent for the Lenders under the Credit Agreement described below
("Agent"), all of his right, title and interest in and to the securities this
day delivered to and deposited with Agent, together with all other securities
which shall hereafter be delivered to Agent pursuant to this Agreement during
the existence of this Agreement (collectively called "Collateral"), together
with whatever is receivable or received when any Collateral or proceeds are
sold, collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary, including without limitation the Collateral delivered
to Agent and set forth on SCHEDULE A attached hereto, as such schedule may from
time to time be amended, altered or changed, and including any stock options,
rights to subscribe, stock splits, liquidating dividends, cash dividends,
dividends paid in stock, new securities or other property of any kind which
Pledgor is or may hereafter be entitled to receive on account of any securities
pledged hereunder, including without limitation stock received by Pledgor due to
stock splits or dividends paid in stock or sums paid upon or in respect of any
securities pledged hereunder upon the liquidation or dissolution of the issuer
thereof (hereinafter called "Proceeds"), and in the event that Pledgor receives
any such Proceeds, Pledgor will hold the same in trust on behalf of and for the
benefit of Agent and will immediately deliver all such Proceeds to Agent in the
exact form received, with the endorsement of Pledgor if necessary and/or
appropriate undated stock powers duly executed in blank, to be held by Agent as
a part of the Collateral, subject to all terms hereof.
2. OBLIGATIONS SECURED. The obligations secured hereby are the
payment and performance of all present and future obligations with respect to
principal, interest, fees, collection costs, indemnities or otherwise with
respect to the Term Loan (the "Indebtedness") of Ticketmaster Group, Inc., an
Illinois corporation ("TMG"), due to Agent and the Lenders under the Credit
Agreement by and among TMG, Wells Fargo Bank, National Association ("Wells
Fargo") and the other financial institutions signatory thereto (together with
Wells Fargo, the "Lenders") and Agent dated as of November 18, 1994 as same may
be extended,
<PAGE>
modified or renewed from time to time (collectively, the "Credit Agreement";
capitalized terms used herein without definition shall have the meaning set
forth therein). For clarification, the term "Term Loan" means the advances of
the Lenders to TMG that, taken together, constitute the Term Loan under the
Credit Agreement. The word "Indebtedness" is used herein in its most
comprehensive sense and includes any and all such obligations now or hereafter
made, incurred or created, whether voluntary or involuntary and however arising,
whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, and whether Pledgor may be liable individually or
jointly including, without limitation, amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code and
interest which, but for the filing of a petition in bankruptcy, would accrue on
all Indebtedness.
3. TERMINATION. This Agreement will terminate upon the payment and
performance of all Indebtedness secured hereby.
4. WARRANTIES OF THE PLEDGOR. Pledgor represents and warrants that:
(a) Pledgor is the owner of the Collateral and Proceeds;
(b) Pledgor has the right to pledge the Collateral and Proceeds;
(c) all Collateral and Proceeds are genuine, free from liens, and
free from material setoffs, default, prepayment and defenses of any kind or
character, except as heretofore disclosed in writing to Agent and except as
provided in the Credit Agreement;
(d) specifically with respect to Collateral and Proceeds consisting
of securities, that the same comply with material applicable laws
concerning form, content and manner of preparation and execution;
(e) The Pledgor is an individual of majority and fully competent to
contract;
(f) The execution, delivery and performance by the Pledgor of this
Agreement require no governmental approval and do not contravene any law or
any contractual restriction binding on the Pledgor;
(g) This Agreement is the legal, valid and binding obligation of the
Pledgor enforceable against the Pledgor in accordance with its terms;
2
<PAGE>
(h) There is no pending or threatened action or proceeding affecting
the Pledgor before any court, governmental agency or arbitrator which might
materially and adversely affect the financial condition of the Pledgor; and
(i) (a) The Pledgor is the owner of 79% all of the issued and
outstanding common stock of TMG; (b) the Lenders' agreement to make the
Loans to TMG is of substantial and material benefit to the Pledgor; and (c)
the Pledgor has reviewed and approved the Credit Agreement and is fully
informed of the remedies Lenders may pursue upon the occurrence of an Event
of Default under the Credit Agreement.
5. COVENANTS OF THE PLEDGOR.
A. Pledgor agrees in general, except as permitted in the Credit
Agreement: (a) to pay all reasonable expenses, including reasonable attorneys'
fees, incurred by Agent in the perfection, preservation, enforcement and
exercise of its rights, powers, privileges and remedies hereunder; (b) to permit
Agent to exercise its powers granted hereunder; (c) to execute and deliver such
documents as Agent deems reasonably necessary to create, perfect and continue
the security interests contemplated hereby; and (d) not to change his residence
or the place where he keeps his records concerning the Collateral and Proceeds
without first giving Agent written notice of the address to which Pledgor is
moving same.
B. Pledgor agrees with regard to Collateral and Proceeds, except as
permitted in the Credit Agreement: (a) not to permit any lien on the Collateral
or Proceeds except in favor of Agent; and (b) not to sell, hypothecate or
otherwise dispose of any Collateral or Proceeds subject hereto at any time,
except to Agent.
C. Pledgor agrees to maintain as Collateral at all times hereunder
(i) shares of common stock of an issuer listed on a public stock exchange
(including NASDAQ) which are subject to an effective registration statement
under the Securities Act of 1933 and are freely tradable and/or contain no
restriction that would prohibit or delay any sale thereof immediately upon the
occurrence of any Event of Default and/or (ii) investment grade bonds that are
freely tradable, which stock and bonds have an aggregate market value equal to
no less than then $52,000,000 or such amount as will cause the ratio of the
outstanding principal amount of the Term Loan to such stock and bonds to equal
no more than 76.92%.
Unless Agent elects to exercise its right and power to do so, Pledgor
agrees: (a) if requested by Agent after an Event of Default exists, to receive
and use reasonable diligence to collect Proceeds, in trust and as the property
of Agent, and to
3
<PAGE>
immediately endorse as appropriate and deliver such Proceeds to Agent daily in
the exact form in which they are received together with a collection report in
form reasonably satisfactory to Agent; (b) in the event Agent elects to receive
payments of proceeds hereunder as a result of an Event of Default, to pay all
reasonable expenses incurred by Agent in connection therewith, including
reasonable expenses of accounting, correspondence, collection efforts, filing,
recording, record keeping and expenses incidental thereto; and (c) to provide
any reasonable service and do any other acts or things reasonably necessary to
keep the Collateral and Proceeds free and clear of all defenses, rights of
offset and counterclaims.
6. POWERS OF AGENT. Pledgor appoints Agent as his true attorney in
fact to perform any of the following powers, which are coupled with an interest,
are irrevocable until termination of this Agreement and may be exercised from
time to time by Agent's officers and employees, or any of them, only if an Event
of Default exists: (a) to perform any obligation of Pledgor hereunder with
respect to the Collateral in Pledgor's name or otherwise; (b) to notify any
person obligated on any security, instrument or other document subject to this
Agreement of Agent's rights hereunder; (c) to collect by legal proceedings or
otherwise all dividends, interest, principal or other sums now or hereafter
payable upon or on account of the Collateral or Proceeds; (d) to enter into any
extension, reorganization, deposit, merger or consolidation agreement, or any
other agreement relating to or affecting the Collateral or Proceeds, and in
connection therewith to deposit or surrender control of the Collateral and
Proceeds, to accept other property in exchange for the Collateral and Proceeds,
and to do and perform such acts and things as Agent may deem proper, and any
money or property received in exchange for the Collateral or Proceeds may be
applied to the Indebtedness or held by Agent under this Agreement; (e) to make
any compromise or settlement Agent deems reasonable, desirable and proper in
respect of the Collateral and Proceeds; (f) to insure and preserve the
Collateral and Proceeds; (g) to perform any obligation of Pledgor under this
Agreement with respect to the Collateral; (h) to exercise all rights, powers and
remedies which Pledgor would have, but for this Agreement, under all the
Collateral and Proceeds subject to this Agreement; and (i) to do all acts and
things and execute all documents in the name of Pledgor or otherwise, reasonably
deemed by Agent as necessary, proper and convenient in connection with the
perfection of its security interests hereunder. Notwithstanding the foregoing,
the following powers of Agent under this Section 6 may be exercised regardless
of whether an Event of Default exists: (b), (f) and (i). If an Event of Default
exists, then to effect the purposes of this Agreement, or otherwise upon
instructions of the Pledgor owning the relevant Collateral, Agent may cause such
Collateral and/or Proceeds thereof to be transferred to Agent's name or the name
of Agent's nominee. Without limiting the generality of the foregoing, if an
4
<PAGE>
Event of Default has occurred and is continuing, any or all Collateral and/or
Proceeds consisting of securities may without notice be registered in the name
of Agent or its nominee, and Agent or its nominee may thereafter, without
notice, exercise all voting and corporate rights at any meeting of the
shareholders of the issuer thereof and exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any Collateral and/or Proceeds as if it were the absolute owner
thereof, including without limitation, the right to exchange, at its discretion,
any and all Collateral and/or Proceeds upon the merger, consolidation,
reorganization, or recapitalization or other readjustment of, or upon the
exercise by, the issuer thereof or Agent of any right, privilege or option
pertaining to any shares of the Collateral and/or Proceeds, and in connection
therewith, to deposit and deliver any and all of the Collateral and/or Proceeds
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as Agent may determine, all without
liability except to account for property actually received by Agent, but Agent
shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
7. CASH COLLATERAL ACCOUNT. Any money received by Agent in respect
of the Collateral may, at Agent's option, be retained in an interest bearing
cash collateral account (the "Cash Collateral Account") and the same shall, for
all purposes, be deemed Collateral hereunder. Notwithstanding the foregoing, so
long as no Event of Default exists, Pledgor may retain all cash dividends paid
and interest payments made on the securities pledged hereunder.
8. AGENT'S CARE AND DELIVERY OF COLLATERAL.
(a) Agent's obligation with respect to Collateral and Proceeds in its
possession shall be strictly limited to the duty to exercise reasonable care in
the custody and preservation of such Collateral and Proceeds, and such duty
shall not include any obligation to ascertain or to initiate any action with
respect to or to inform Pledgor of maturity dates, conversion, call, or exchange
rights, or offers to purchase the Collateral or Proceeds, or any similar
matters, notwithstanding Agent's knowledge of the same. Agent shall be deemed
to have acted in accordance with the standard of care described in the prior
sentence if it applies substantially equivalent care in handling the Collateral
to that which it applies in handling its own property of a similar nature.
Agent shall have no duty to take any steps necessary to preserve the rights of
Pledgor against prior parties, or to initiate any action to protect against the
possibility of a decline in the market value of the Collateral or Proceeds.
Agent shall not be obligated to take any action with respect to the Collateral
or Proceeds requested by the Pledgor owning the relevant Collateral unless such
request is made in
5
<PAGE>
writing, and, except as set forth in Section 8(b), Agent determines, in its sole
discretion, that the requested action would not unreasonably jeopardize the
value of such Collateral and Proceeds as security for the Indebtedness or would
not create liability for Agent.
(b) If the market value of the Collateral exceeds 150% of the
outstanding principal amount of the Term Loan (the "Release Ratio"), Pledgor may
deliver a written notice to Agent (i) setting forth his calculation of such
market value, (ii) requesting the release of a portion of the Collateral such
that the market value of the remaining Collateral would be sufficient to satisfy
the Release Ratio and (iii) providing delivery instructions for the Collateral
to be released. Upon receipt of such notice, Agent shall release the portion of
the Collateral as requested.
(c) Agent may at any time deliver the Collateral and Proceeds, or any
part thereof, to Pledgor, and the receipt thereof by Pledgor shall be a complete
and full acquittance for the Collateral and Proceeds so delivered, and Agent
shall thereafter be discharged from any liability or responsibility therefor,
except for liabilities, if any, for the foregoing, while it was in the
possession of Agent.
9. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS.
Except as otherwise provided herein or in the Credit Agreement, Pledgor agrees
to pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of
Pledgor to do so, Agent at its option may pay any of them and shall be the sole
judge of the legality or validity thereof and the amount necessary to discharge
the same; PROVIDED, HOWEVER, that, unless such taxes, charges, liens and
assessments have become a federal tax lien on any of the Collateral, no such
tax, charge, lien, or assessment need be paid by Pledgor if the same is being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if an adequate reserve or other appropriate provision,
if any, shall have been made therefor by Pledgor as would be required in order
to be in conformity with GAAP. Any such payments made by Agent shall be
obligations of Pledgor to Agent, due and payable upon demand, together with
interest at a rate determined in accordance with the provisions of Section 13
herein, and shall be secured by the Collateral and Proceeds, subject to all of
the terms and conditions of this Agreement.
10. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement: the existence of any
"Event of Default" as defined in the Credit Agreement.
6
<PAGE>
11. REMEDIES. Upon the occurrence of any Event of Default, Agent
shall have the right to declare immediately due and payable all or any
Indebtedness secured hereby, without presentment, demand, protest or notice of
dishonor, all of which are expressly waived by Pledgor. Agent shall have all
other rights, privileges, powers and remedies granted to a secured party upon
default under the California Uniform Commercial Code or otherwise provided by
law, including without limitation the right to contact all persons obligated to
Pledgor on Collateral and to instruct such persons to deliver all Proceeds
directly to Agent. The rights, privileges, powers and remedies of Agent shall
be cumulative. No delay, failure or discontinuance of Agent in exercising any
right, power, privilege or remedy hereunder shall affect or operate as a waiver
of such right, power, privilege or remedy; nor shall any single or partial
exercise of any such right, power, privilege or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power, privilege or remedy. Any waiver, permit, consent or
approval of any kind by Agent of any default hereunder, or any such waiver of
any provisions or conditions hereof, must be in writing and shall be effective
only to the extent set forth in writing.
While an Event of Default exists: (a) Agent may appropriate the
Collateral and apply all Proceeds toward repayment of the Indebtedness secured
hereby in such order of application as Agent may from time to time elect or, at
Agent's sole option, place any Proceeds in the Cash Collateral Account; and (b)
Pledgor will assemble and deliver all books and records pertaining to the
Collateral and Proceeds to Agent at a reasonably convenient place designated by
Agent. For any Collateral or Proceeds consisting of securities, Agent shall be
under no obligation to delay a sale of any portion thereof for the period of
time necessary to permit the issuer thereof to register such securities for
public sale under any applicable state or Federal law, even if the issuer
thereof would agree to do so. Each purchaser at any sale of the Collateral
shall hold the property sold absolutely free from any claim or right on the part
of Pledgor, and Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have. Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Agent shall not be obligated to make any
sale regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Pledgor hereby waives any claims
against Agent arising by reason the fact that the price at which any Collateral
may have been sold at such private sale was less than the price which might have
been
7
<PAGE>
obtained at a public sale, even if Agent accepts the first offer received and
does not offer such Collateral to more than one offeree. Any amount realized by
Agent hereunder shall be applied as set forth in Section 7.3 of the Credit
Agreement.
12. DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the resignation of
Agent as Agent under the Credit Agreement, Agent may transfer all or any part of
the Collateral or Proceeds to a successor Agent and shall be fully discharged
thereafter from all liability and responsibility with respect to any of the
foregoing so transferred (but not from liabilities, if any, for the foregoing
while in the possession of Agent), and the transferee shall be vested with all
rights and powers of Agent hereunder with respect to any of the foregoing so
transferred; but with respect to any Collateral or Proceeds not so transferred,
Agent shall retain all rights, powers, privileges and remedies herein given.
13. COSTS, EXPENSES AND ATTORNEYS FEES. Pledgor shall pay to Agent
(a) the reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and expenses, including allocated fees and expenses of in-house
counsel of Agent on a real hourly basis) incurred by Agent and the Lenders to
correct any default, to enforce any provision of this Agreement or any other
document contemplated hereby or to prosecute or defend any lawsuit (whether in
pre-trial, trial or appellate proceedings) or administrative proceeding arising
from or relating to this Agreement, or the transactions or occurrences arising
hereunder (provided that solely with respect to any litigation arising in
connection with actions described in this clause (a), Agent and the Lenders
shall only be entitled to reimbursement of such costs and expenses to the extent
their position has substantially prevailed in court), and (b) the reasonable
out-of-pocket costs and expenses (including reasonable attorneys' fees and
expenses, including allocated fees and expenses of in-house counsel on a real
hourly basis, and the fees and expenses of other professionals) incurred by
Agent or any Lender in connection with any bankruptcy or other insolvency
proceeding, reorganization, workout, composition or other creditor arrangement
of the Pledgor including without limitation the seeking of relief from or
modification of the automatic stay, the negotiation and drafting of a cash
collateral order, or any proceeding in bankruptcy relating to the valuation of
the Collateral and/or Proceeds. Pledgor agrees to release Agent and Lenders
from any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against Agent or any
Lender in any way relating to or arising out of this Agreement or the
enforcement of the terms thereof, except to the extent that any of the foregoing
arise from the gross negligence or willful misconduct of Agent. Pledgor agrees
to indemnify Agent against any and all liabilities, obligations, losses,
damages, penalties, actions,
8
<PAGE>
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against Agent by
reason of Agent's reliance on any representation or warranty of Pledgor set
forth herein which is untrue when made by Pledgor.
14. STATUTE OF LIMITATIONS. Until all Indebtedness secured hereby
shall have been paid in full, the power of sale and all other rights, powers,
privileges and remedies granted to Agent hereunder shall continue to exist and
may be exercised by Agent at any time and from time to time irrespective of the
fact that the Indebtedness or any part thereof may have become barred by any
statute of limitations, or that the personal liability of Pledgor may have
ceased, unless such liability shall have ceased due to the payment in full of
all Indebtedness secured hereunder.
15. WAIVERS. Except as otherwise expressly agreed by Agent and the
Lenders in the Credit Agreement, Pledgor hereby waives any right to require
Agent to: (a) proceed against any person, including Borrower; (b) proceed
against or exhaust any security held from Borrower or any other power; (c)
pursue any other remedy in Agent's power; or (d) make any presentments or
demands for performance, or give any notices of nonperformance, protests,
notices of protest or notices of dishonor in connection with any obligations or
evidences of Indebtedness held by Agent as security, in connection with any
obligations or evidences of indebtedness which constitute in whole or in part
the Indebtedness guaranteed hereunder, or in connection with the creation of new
or additional Indebtedness.
Except as otherwise expressly agreed by Agent and the Lenders in the
Credit Agreement, Pledgor hereby waives any defense based upon or arising by
reason of: (a) any disability or other defense of Borrower or any other person;
(b) the cessation or limitation from any cause whatsoever, other than payment in
full, of the Indebtedness of Borrower or any other person; (c) any lack of
authority of any officer, director, partner, agent or any other person acting or
purporting to act on behalf of Borrower, or any defect in the formation of
Borrower, (d) the application by Borrower of the proceeds of any Indebtedness
for purposes other than the purposes represented by Borrower to Agent and the
Lenders or intended or understood by Agent and the Lenders or Pledgor; (e) any
act or omission by Agent or any Lender which directly or indirectly results in
or aids the discharge of Borrower or any Indebtedness by operation of law or
otherwise except for a discharge resulting from Agent's or a Lender's gross
negligence or willful misconduct; or (f) any modification of the Indebtedness,
in any form whatsoever including without limitation the renewal, extension,
acceleration or other change in time for payment of the Indebtedness, or other
change in the terms of the Indebtedness or any part thereof, including any
decrease of the rate of interest thereon, but excluding any increase in the rate
of interest thereon (other
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than any such increase required under the terms of the Credit Agreement as in
effect immediately following the execution thereof) or any increase in the
principal amount of the Term Loan which causes such principal amount to exceed
$40,000,000. Until all Indebtedness guaranteed hereunder shall have been paid
in full, Pledgor hereby waives any defense Pledgor may have based upon any
election of remedies by Agent which destroys Pledgor's subrogation rights or
Pledgor rights to proceed against Borrower for reimbursement, including without
limitation any loss of rights Pledgor may suffer by reason of any rights, powers
or remedies of Borrower in connection with any antideficiency laws or any other
laws limiting, qualifying or discharging Borrower's Indebtedness (including
without limitation Sections 726 and 580d of the California Code of Civil
Procedure as from time to time amended). Until all Indebtedness shall have been
paid in full, Pledgor further waives any right to enforce any remedy which Agent
now has or may hereafter have against Borrower or any other person, waives any
benefit of, or any right to participate in any security whatsoever now or
hereafter held by Agent, with respect to the Indebtedness.
The liability of Pledgor hereunder shall be reinstated and revived and
the rights of Agent shall continue if and to the extent for any reason any
amount at any time paid on account of any Indebtedness secured hereby is
rescinded or must be otherwise restored by Agent or any Lender, whether as a
result of any proceedings in bankruptcy or reorganization or otherwise, all as
though such amount had not been paid. The determination as to whether any
amount so paid must be rescinded or restored shall be made by Agent in its sole
discretion; provided, however, that if Agent chooses to contest any such matters
at the request of Pledgor, Pledgor agrees to indemnify and hold Agent harmless
from and against all reasonable costs and expenses, including reasonable
attorneys' fees, expended or incurred by Agent in connection therewith,
including without limitation, in any litigation with respect thereto.
Pledgor warrants and agrees that each of the waivers set forth above
is made with Pledgor's full knowledge of its significance and consequences, and
that under the circumstances, the waivers are reasonable and not contrary to
public policy or law. If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective only to the
extent permitted by law.
16. MISCELLANEOUS. Except as otherwise provided herein or in the
Credit Agreement, presentment, protest, notice of protest, notice of dishonor
and notice of nonpayment are waived with respect to any payment or Proceeds to
which Agent is entitled hereunder; any right to direct the application of
payments or security for Indebtedness of Pledgor hereunder and any right to
require proceedings against others or to require exhaustion of security are
waived; and consent to extensions,
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forbearances or alterations of the terms of Indebtedness, the release or
substitution of security, and the release of guarantors is given with respect to
Collateral or Proceeds subject to this Agreement; provided however, that in each
instance Agent believes in good faith that the action in question is
commercially reasonable in that it does not unreasonably increase the risk of
nonpayment of the Indebtedness to which the action applies.
17. NOTICES. All notices or demands of any kind which Agent may be
required or desires to serve upon Pledgor shall be served upon Pledgor in the
manner set forth in Section 9.2 of Credit Agreement as if Pledgor were TMG to
the address of Pledgor set forth under its name in the signature pages hereto.
18. SUCCESSORS, ASSIGNS; GOVERNING LAW. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
parties, and shall be governed by and construed in accordance with the laws of
the State of California.
19. REPAYMENT OF TERM LOAN. The Pledgor may, but shall have no
obligation to, prepay the Indebtedness secured hereby in full and thereby obtain
a release of the Collateral pledged hereunder.
20. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed this ___ day of
November, 1994.
---------------------------
Paul G. Allen
Acknowledged and agreed.
WELLS FARGO BANK, N.A.,
as Agent
By:
----------------------
Title:
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SCHEDULE A
PLEDGED SECURITIES
Certificate No. MS136103 for Five Hundred Thousand shares of common
stock of Microsoft Corporation
Certificate No. MS136104 for Five Hundred Thousand shares of common
stock of Microsoft Corporation
A-1
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<PAGE>
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Between
U. S. BANK OF WASHINGTON, NATIONAL ASSOCIATION
and
PACER/CATS/CCS
Dated as of July 31, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS................................................. 1
1.1 Terms Defined.................................................. 1
1.2 Accounting Terms............................................... 7
1.3 Rules of Construction.......................................... 7
1.4 Incorporation of Recitals and Exhibits......................... 7
ARTICLE II. THE LOAN................................................... 7
2.1 Loan Commitment................................................ 7
2.2 Use of Proceeds................................................ 8
2.3 Note........................................................... 8
2.4 Interest Rates................................................. 8
2.5 Basis for Determining Interest Rate Inadequate or Illegal...... 9
2.6 Interest Cost.................................................. 9
2.7 Repayment...................................................... 10
2.8 Fundings....................................................... 11
2.9 Loan Fee....................................................... 11
2.10 Letters of Credit.............................................. 11
ARTICLE III. GENERAL PROVISIONS APPLICABLE TO THE LOAN................. 13
3.1 Manner of Payment.............................................. 13
3.2 Statements..................................................... 13
3.3 Book Entry Loan Account........................................ 13
3.4 Computations of Interest....................................... 13
3.5 Default Interest............................................... 13
3.6 Maximum Interest Rate.......................................... 14
3.7 Late Charge.................................................... 14
3.8 Prepayments.................................................... 14
3.9 Other Loan Documents........................................... 14
3.10 Termination of Keep-Well Agreement............................. 14
3.11 Extensions, Renewals, and Modifications........................ 14
ARTICLE IV. CONDITIONS PRECEDENT FOR FUNDINGS UNDER THE LOAN........... 15
4.1 Conditions Precedent for Initial Funding....................... 15
4.2 Conditions Precedent to Each Subsequent Funding................ 17
ARTICLE V. AFFIRMATIVE COVENANTS....................................... 17
5.1 Financial Data................................................. 18
5.2 Licenses and Permits........................................... 19
5.3 Maintenance of Properties...................................... 19
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5.4 Payment of Charges............................................. 19
5.5 Insurance...................................................... 20
5.6 Maintenance of Records......................................... 20
5.7 Inspection..................................................... 20
5.8 Hazardous Substances........................................... 20
5.9 Existence...................................................... 21
5.10 Exchange of Note............................................... 22
5.11 Maintenance of Liens........................................... 22
5.12 Other Agreements............................................... 22
5.13 After-Acquired Collateral...................................... 22
5.14 Further Assurances............................................. 22
5.15 Maintenance of Bank Accounts................................... 22
ARTICLE VI. NEGATIVE COVENANTS......................................... 23
6.1 Dividends and Distributions.................................... 23
6.2 Transactions with Affiliates................................... 23
6.3 Other Indebtedness............................................. 23
6.4 Leases and Leasebacks.......................................... 24
6.5 Liens.......................................................... 24
6.6 Advances and Loans............................................. 24
6.7 Investments.................................................... 25
6.8 Consolidation, Merger, and Sale of Assets...................... 25
6.9 Subsidiaries................................................... 25
6.10 Type of Business............................................... 25
6.11 Change of Chief Executive Office or Name....................... 25
6.12 Change in Documents............................................ 26
6.13 Control........................................................ 26
6.14 Pension Plan................................................... 26
6.15 Tangible Net Worth............................................. 26
6.16 Interest Coverage Ratio........................................ 26
6.17 Current Ratio.................................................. 27
6.18 Working Capital................................................ 27
ARTICLE VII. REPRESENTATIONS AND WARRANTIES............................ 27
7.1 Status......................................................... 27
7.2 Power and Authority............................................ 28
7.3 No Violation of Agreements..................................... 28
7.4 Recording and Enforceability................................... 28
7.5 Litigation..................................................... 28
7.6 Good Title to Properties....................................... 29
7.7 Licenses and Permits........................................... 29
7.8 Properties in Good Condition................................... 29
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7.9 Outstanding Indebtedness....................................... 29
7.10 Taxes.......................................................... 29
7.11 License Fees................................................... 29
7.12 Trademarks, Patents, Etc....................................... 29
7.13 Disclosure..................................................... 30
7.14 Regulations U and X............................................ 30
7.15 Names.......................................................... 30
7.16 Condition of Property.......................................... 30
7.17 Pension Plans.................................................. 30
ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES.............................. 31
8.1 Events of Default.............................................. 31
8.2 Acceleration; Remedies......................................... 33
ARTICLE IX. MISCELLANEOUS.............................................. 33
9.1 Notices........................................................ 33
9.2 Payment of Expenses............................................ 34
9.3 Setoff......................................................... 35
9.4 Fees and Commissions........................................... 35
9.5 No Waiver...................................................... 35
9.6 Entire Agreement and Amendments................................ 35
9.7 Benefit of Agreement........................................... 36
9.8 Severability................................................... 36
9.9 Descriptive Headings........................................... 36
9.10 Governing Law.................................................. 36
9.11 Consent to Jurisdiction, Service, and Venue.................... 36
9.12 Arbitration.................................................... 36
9.13 Counterparts................................................... 37
9.14 Statutory Notice............................................... 37
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EXHIBITS
Exhibit A -- Note, Section 2.3
Exhibit B -- Security Agreement, Section 3.9(a)
Exhibit C -- Pledge Agreement, Section 4.1(b)
Exhibit D -- Assignment of Equity Interest, Section 4.1(c)
Exhibit E -- Interest Keep-Well Agreement, Section 4.1(e)
Exhibit F-1
and F-2 -- Subordination Agreement, Section 4.1(f)
Exhibit G -- Opinion of Counsel, Section 4.1(g)
Exhibit H-1 -- Resolution of Joint Venture Partners of Borrower, Section
4.1(j)(ii)
Exhibit H-2 -- Resolution of Directors of Ticketmaster Cinema Group, Ltd.,
Section 4.1(j)(iii)
Exhibit H-3 -- Resolution of Directors of CAC, Section 4.1(j)(iii)
Exhibit H-4 -- Resolution of Directors of Ticketmaster and Incumbency
Certificate, Section 4.1(j)(iv)
Exhibit I -- Existing Liens, Section 6.5
Exhibit J -- Schedule of Trademarks, Patents, Etc., Section 7.12
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FIRST AMENDED AND RESTATED CREDIT AGREEMENT
This first amended and restated credit agreement is made and entered
into as of the 31st day of July, 1996, by and between U. S. BANK OF WASHINGTON,
NATIONAL ASSOCIATION, a national banking association ("U. S. Bank") and
PACER/CATS/CCS, a Delaware joint venture ("Borrower"). Words and phrases with
initial capitalized letters have the meanings assigned in Article I of this
Agreement.
R E C I T A L S :
A. U. S. Bank is a national banking association with its principal
place of business in Seattle, Washington. Borrower is a joint venture formed
and existing under the laws of the state of Delaware and is engaged in the
design, manufacture, and installation of on-site ticketing and point-of-sale
equipment for general or reserve admission ticket users and related businesses.
B. On or about April 15, 1994, U. S. Bank and Borrower entered into
that certain credit agreement, pursuant to which U. S. Bank agreed to extend
certain credit facilities to Borrower. The credit agreement entered into between
U. S. Bank and Borrower has been amended by a total six amendments, which
together with the credit agreement described in this RECITAL B, shall
hereinafter be referred to as the "Original Agreement."
C. U. S. Bank and Borrower now desire to amend and restate the
Original Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, the parties agree as follows:
ARTICLE I. DEFINITIONS
1.1 TERMS DEFINED. As used herein, the following terms have the
meanings set forth below:
"Affiliate" means a Person that now or hereafter, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with Borrower. A Person shall be deemed to control a
corporation or partnership if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management
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of such corporation or partnership, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this first amended and restated credit agreement and
includes all modifications of this Agreement.
"Applicable Law" means all applicable provisions and requirements of
all (a) constitutions, statutes, ordinances, rules, regulations, standards,
orders, and directives of any Governmental Bodies, (b) Governmental Approvals,
and (c) orders, decisions, decrees, judgments, injunctions, and writs of all
courts, whether such Applicable Laws presently exist, or are modified,
promulgated, or implemented after the date hereof.
"Borrower" means Pacer/CATS/CCS, a Delaware joint venture, and its
successors, formerly known as Pacer/CATS/CCS -- a Wembley Ticketmaster Joint
Venture.
"Borrowing Notice" has the meaning set forth in SECTION 2.6(A) herein.
"Business Day" means any day except a Saturday, Sunday, or other day
on which national banks in the state of Washington are authorized or required by
law to close.
"CAC" means Cinema Acquisition Corporation, a Delaware corporation,
and its successors and assigns.
"Capital Expenditures" means the aggregate amount of Consolidated
capital expenditures as determined in accordance with generally accepted
accounting principles, including leases that are or should be capitalized
pursuant to generally accepted accounting principles.
"Cash Flow" means, for the relevant period, Borrower's Consolidated
net income (before taxes), subject to the following adjustments:
(a) There shall be added to net income: (i) charges against income
consisting of depreciation of real and personal property, amortization,
write-off of goodwill, and other intangibles, (ii) interest expense, and (iv)
increases in the outstanding principal amount of Subordinated Debt; and
(b) There shall be deducted from net income: (i) revenues derived
from sources other than continuing operations, such as net gains from sales of
capital assets, collection of proceeds of life insurance policies, write-up of
assets, or gains from the sale, acquisition, or retirement of securities,
(ii) cash paid by Borrower and the Computel Companies during the relevant period
for Capital Expenditures, which cash does not constitute
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proceeds of loans made to Borrower, and (iii) dividends and distributions paid
to Borrower's joint venture partners.
(c) "Cash Flow" shall not include amounts collected by Borrower or
the Computel Companies that constitute Client Accounts.
"Claims" has the meaning set forth in SECTION 9.12 herein.
"Client Accounts" means Consolidated amounts held by Borrower for the
account of vendors of tickets and merchandise.
"Collateral" means all the property, real or personal, tangible or
intangible, now owned or hereafter acquired, in which U. S. Bank has been or is
to be granted a security interest by Borrower or any other Person, to secure the
Indebtedness of Borrower to U. S. Bank.
"Computel Companies" means CCS-Computel Computer Systeme GmbH and all
of its subsidiaries, together with all successors of any of the foregoing.
"Consolidated" means the consolidated financial figures of Borrower,
the Computel Companies, and any other Persons wholly owned by Borrower,
calculated in United States currency.
"Current Ratio" means the ratio of Borrower's Consolidated current
assets to Borrower's Consolidated current liabilities (excluding an amount equal
to one-half of deferred revenue).
"Default" means any condition or event that constitutes an Event of
Default or with the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" has the meaning set forth in SECTION 8.1 herein.
"Excess Cash Flow" means, for the relevant period, Cash Flow, less
increases in the outstanding principal amount of Subordinated Debt, plus (a)
cash paid by Borrower and the Computel Companies for Capital Expenditures, which
cash does not constitute proceeds of loans made to Borrower and (b) dividends
and distributions paid to Borrower's joint venture partners.
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"Funding" means any disbursement of the proceeds of the Loan or the
issuance or renewal of any Letter of Credit.
"Governmental Approval" means any authorization, consent, approval,
certificate of compliance, license, permit, or exemption from, registration or
filing with, any Governmental Body required by Applicable Law.
"Governmental Body" means the government of the United States, any
state or any foreign country, or any governmental or regulatory official, body,
department, bureau, subdivision, agency, commission, court, or authority, or any
instrumentality thereof, whether federal, state, or local.
"Hazardous Materials" means oil or petrochemical products, PCB's,
asbestos, urea formaldehyde, flammable explosives, radioactive materials,
hazardous wastes, toxic substances, or related materials including but not
limited to substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," or "toxic substances"
under any Hazardous Materials Laws.
"Hazardous Materials Claims" means (a) enforcement, cleanup, removal,
or other regulatory actions instituted, completed, or threatened by any
Governmental Body pursuant to any applicable Hazardous Materials Laws; and
(b) claims made or threatened by any third party against Borrower or its
property relating to damage, contribution, cost recovery, compensation, loss, or
injury resulting from Hazardous Materials.
"Hazardous Materials Laws" means all Applicable Laws pertaining to
Hazardous Materials.
"IBOR Rate" means for any Interest Period, the rate per annum equal to
the arithmetic average (rounded upward to the nearest 1/16 of 1 percent) of the
rates per annum determined by U. S. Bank as of the times specified in a
Borrowing Notice on the date two Business Days prior to the first day of the
applicable Interest Period as the rates offered to U. S. Bank by three
Eurodollar money market dealers in such Eurodollar market as may be selected by
U. S. Bank for U.S. dollar deposits to be delivered on the first day of such
Interest Period for the number of months therein; PROVIDED, however, that
U. S. Bank's IBOR Rate shall be adjusted to take into account the maximum
reserves required to be maintained for Eurocurrency liabilities by banks during
each such Interest Period as specified in Regulation D of the Board of Governors
of the Federal Reserve System or any successor regulation.
"IBOR Rate Borrowing" means any portion of the Loan with respect to
which Borrower has elected a rate based upon the IBOR Rate to apply. The
minimum amount of each IBOR Rate Borrowing shall be $1,000,000 and shall be in
integrals of $10,000 in excess of $1,000,000.
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"Indebtedness" means all items that in accordance with generally
accepted accounting principles would be included in determining total
liabilities as shown on the liabilities side of the balance sheet as of the date
that "Indebtedness" is to be determined and in any event includes liabilities
secured by any mortgage, deed of trust, pledge, lien, or security interest on
property owned or acquired, whether or not such a liability has been assumed.
The term "Indebtedness" shall not include any liability of Borrower resulting
directly from Client Accounts.
"Interest Coverage Ratio" means the ratio of Cash Flow to the sum of
(a) interest expense on Borrower's Indebtedness to U. S. Bank during the
relevant period and (b) the amount of interest on the Subordinated Debt paid by
Borrower during the relevant period (if any).
"Interest Keep-Well Agreement" has the meaning set forth in
SECTION 4.1 (E) herein and includes all modifications thereof.
"Interest Period" means as to any IBOR Rate Borrowing, a period of
one, three, or six months commencing on the date the IBOR Borrowing Rate becomes
applicable thereto; PROVIDED however, that: (a) no Interest Period shall be
selected which would extend beyond the maturity date of the Loan; (b) any
Interest Period that would otherwise expire on a day that is not a Business Day
shall be extended to the next succeeding Business Day, unless the result of such
extension would be to extend such Interest Period into another calendar month,
in which event the Interest Period shall end on the immediately preceding
Business Day; and (c) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month.
"Letters of Credit" has the meaning set forth in SECTION 2.10 herein
and includes all renewals, replacements, and amendments thereof.
"Loan" has the meaning set forth in SECTION 2.1 herein and includes
all renewals of and amendments to the Loan.
"Loan Documents" means this Agreement, the Note, the Security
Agreement, the Interest Keep-Well Agreement, the Subordination Agreement, Pledge
Agreement, together with all other agreements, instruments, and documents
arising out of or relating to this Agreement or the Loan, and includes all
replacements, renewals and amendments thereof.
"Nonrevolving Period" has the meaning set forth in SECTION 2.1(B)
herein.
"Note" has the meaning set forth in SECTION 2.3 herein and includes
all renewals and replacements of and amendments to the Note.
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"Original Agreement" has the meaning set forth in RECITAL B herein.
"Permitted Liens" has the meaning set forth in SECTION 6.5 herein.
"Person" means any individual, partnership, joint venture, limited
liability company, limited liability partnership, firm, corporation,
association, trust, or other enterprise or any Governmental Body.
"Plan" means an employee pension benefit plan that is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code of 1986 and is either (a) maintained by Borrower or any
Affiliate for employees of Borrower or any Affiliate or (b) maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which Borrower or any Affiliate is
then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"Pledge Agreement" has the meaning set forth in SECTION 4.1(b) herein
and includes all amendments to the Pledge Agreement.
"Prime Rate" means that rate of interest announced by U. S. Bank from
time to time as its prime rate. The Prime Rate is not the lowest rate of
interest charged by U. S. Bank to any classification of U. S. Bank customers.
For purposes of this Agreement, each time the Prime Rate changes, a
contemporaneous change shall occur in the interest rate charged to Borrower on
any loan then bearing interest at a rate indexed to the Prime Rate, effective
upon the announcement or publication of any such change in rate. U. S. Bank
shall not be obligated to notify Borrower of any change in the Prime Rate;
however, the Prime Rate is available upon inquiry of U. S. Bank.
"Prime Rate Borrowing" means any portion of the Loan that, pursuant to
the terms of this Agreement, bears interest indexed to the Prime Rate.
"Revolving Period" has the meaning set forth in SECTION 2.1(c) herein.
"Security Agreement" has the meaning set forth in SECTION 3.9(a)
herein and includes all amendments to the Security Agreement.
"Subordination Agreement" has the meaning set forth in SECTION 4.1(f)
herein and includes all amendments to the Subordination Agreement.
"Subordination Debt" means the Indebtedness of Borrower that is
subordinated to the prior payment in full of the Indebtedness of Borrower to
U. S. Bank pursuant to the Subordination Agreement.
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"Tangible Net Worth" means Borrower's Consolidated net worth
determined in accordance with generally accepted accounting principles, less
(a) the amount of all deferred charges; (b) all intangible assets including but
not limited to goodwill, licenses, franchises, trademarks, trade names, service
marks, patents, and copyrights; (c) unamortized debt discount and expense;
(d) the cost of capital stock of an Affiliate; (e) any Indebtedness owing to
Borrower by an Affiliate thereof, unless such Indebtedness arose in connection
with the sale or lease of goods or property in the ordinary course of business
or the performance of services in the ordinary course of business and would
otherwise constitute current assets in accordance with generally accepted
accounting principles; and (f) the amount of any write-up in book value of the
assets of Borrower resulting from any revaluation of assets.
"Ticketmaster" means Ticketmaster Corporation, an Illinois corporation
and its successors.
"U. S. Bank" means U. S. Bank of Washington, National Association, a
national banking association, and its successors and assigns.
"Working Capital" means Borrower's Consolidated current assets, less
Borrower's Consolidated current liabilities (excluding an amount equal to
one-half of deferred revenue).
1.2 ACCOUNTING TERMS. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with generally accepted accounting
principles consistently applied.
1.3 RULES OF CONSTRUCTION. Unless the context otherwise requires,
the following rules of construction apply to the Loan Documents:
(a) Words in the singular include the plural and in the plural
include the singular.
(b) Provisions of the Loan Documents apply to successive events and
transactions.
(c) In the event of any inconsistency between the provisions of this
Agreement and the provisions of any of the other Loan Documents, the provisions
of this Agreement govern.
1.4 INCORPORATION OF RECITALS AND EXHIBITS. The foregoing recitals
are incorporated into this Agreement by reference. All references to "Exhibits"
contained herein
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are references to exhibits attached hereto, the terms and conditions of which
are made a part hereof for all purposes.
ARTICLE II. THE LOAN
2.1 LOAN COMMITMENT.
(a) Subject to and upon the terms and conditions set forth herein and
in reliance upon the representations, warranties, and covenants of Borrower
contained herein or made pursuant hereto, U. S. Bank will lend to Borrower
$7,500,000 (the "Loan"). The Loan is a consolidation and renewal of the
revolving loan and the term loan extended to Borrower pursuant to the terms of
the Original Agreement.
(b) From the date of this Agreement until the date that the
outstanding principal balance of the Loan (together with the outstanding amount
of any Letters of Credit) is less than or equal to $6,000,000 (the "Nonrevolving
Period"), Borrower shall not be entitled to any advances of principal other than
the initial Funding in the amount of $7,500,000. Notwithstanding the foregoing,
U. S. Bank will issue Letters of Credit during the Nonrevolving Period in
accordance with the provisions of SECTION 2.10 herein.
(c) Subject to and upon the terms and conditions set forth herein and
in reliance upon the representations, warranties, and covenants of Borrower
contained herein or made pursuant hereto, during the period commencing with the
expiration of the Nonrevolving Period and continuing through June 30, 1999 (the
"Revolving Period"), U. S. Bank will make Fundings to Borrower from time to time
on a revolving credit basis. At no time during the Revolving Period shall the
outstanding principal balance of the Loan plus the outstanding amount of Letters
of Credit exceed an amount equal to $6,000,000 less the aggregate amount of
required principal reduction payments provided for in SECTION 2.7 herein after
the expiration of the Nonrevolving Period.
2.2 USE OF PROCEEDS. The initial Funding under the Loan shall be
used by Borrower to consolidate and renew the revolving loan and the term loan
extended to Borrower pursuant to the terms of the Original Agreement.
Subsequent Fundings under the Loan shall be used by Borrower for operating cash
and for the issuance of Letters of Credit.
2.3 NOTE. The Loan shall be evidenced by a promissory note in the
form attached hereto as EXHIBIT A (the "Note").
2.4 INTEREST RATES.
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(a) Except as provided in SECTION 2.4(b) or 3.5 herein, the
outstanding principal balance of the Loan shall bear interest at a rate equal
the Prime Rate plus .25 percent per annum.
(b) Commencing on July 1, 1998, Borrower shall have the option, upon
delivering to U. S. Bank a Borrowing Notice two Business Days in advance, to
convert the interest rate on all or a portion of the Loan to a rate equal to the
IBOR Rate plus 225 basis points per annum for an Interest Rate Period elected by
Borrower in such Borrowing Notice, provided that there shall exist no Default or
Event of Default on the date U. S. Bank receives the Borrowing Notice for an
interest rate conversion under the Loan.
2.5 BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR ILLEGAL.
(a) U. S. Bank's obligation to maintain a rate based upon the IBOR
Rate for the Loan shall be suspended upon U. S. Bank's giving notice to Borrower
that it shall be against Applicable Law or impossible for U. S. Bank to maintain
a rate based upon the IBOR Rate for the Loan until U. S. Bank notifies Borrower
that the circumstances giving rise to the suspension no longer exist.
(b) After the date of this Agreement, if adoption of any Applicable
Law or any change therein or any change in the interpretation or administration
thereof by any Governmental Body, central bank, or comparable agency charged
with the interpretation or administration thereof, or if compliance by
U. S. Bank with any request or directive (whether or not having the force of
Applicable Law) of any such Governmental Body, central bank, or comparable
agency makes it against Applicable Law or impossible for U. S. Bank to maintain
the Loan at a rate based upon the IBOR Rate, U. S. Bank shall promptly give
notice thereof to Borrower.
(c) Upon notice to Borrower provided for in SECTION 2.5(a) or (b)
herein, all IBOR Rate Borrowings shall automatically convert to Prime Rate
Borrowings.
(d) If U. S. Bank notifies Borrower that the circumstances giving
rise to the suspension of rates based upon the IBOR Rate no longer apply, then
the interest rate options set forth in SECTION 2.4 shall again be effective on
the date U. S. Bank provides such notice to Borrower. U. S. Bank shall promptly
notify Borrower in writing if and when IBOR Rate Borrowings are available again.
2.6 INTEREST COST. If the revision of Regulation D announced by the
Board of Governors of the Federal Reserve Board, or if the adoption of any
Applicable Law or any change therein or any change in the interpretation or
administration thereof by any Governmental Body, central bank, or comparable
agency charged with the interpretation or administration thereof, or if
compliance by U. S. Bank with any request or directive (whether
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or not having the force of Applicable Law) of any such Governmental Body,
central bank, or comparable agency:
(a) Shall subject U. S. Bank to any tax, duty, or other charge
resulting from all or any portion of the Loan bearing interest at a rate based
upon the IBOR Rate, or shall change the basis of taxation of payments to
U. S. Bank of the principal of or interest on the Loan, or any portion thereof,
with interest accruing at a rate based upon the IBOR Rate or any other amount
due under this Agreement with regard to the Loan with interest bearing at a rate
based upon the IBOR Rate (except for changes in the rate of tax on the overall
net income of U. S. Bank imposed by the jurisdiction in which U. S. Bank's
principal executive office lies); or
(b) Shall impose or modify any reserve (including but not limited to
any reserve imposed by the Board of Governors of the Federal Reserve System),
special deposit, or similar requirement against assets of, deposits with, or for
the account of, or credit extended by U. S. Bank or shall impose on U. S. Bank
any other condition affecting the IBOR Rate Borrowings under the Loan;
and the result of any of the foregoing is to increase the cost to U. S. Bank of
maintaining the IBOR Rate Borrowings or to reduce the return of U. S. Bank under
this Agreement; then, within two Business Days of the date U. S. Bank provides
Borrower with notice of such event, Borrower may prepay any outstanding IBOR
Rate Borrowings. In the event Borrower does not prepay existing IBOR Rate
Borrowings within such two Business Days, then, from time to time, within ten
days after demand by U. S. Bank, Borrower shall pay to U. S. Bank such
additional amount or amounts as will compensate U. S. Bank for such increasing
cost or reduction in return.
2.7 REPAYMENT.
(a) Commencing on the last day of the month in which the initial
Funding under the Loan is made and on the last day of each month thereafter,
Borrower shall pay U. S. Bank an amount equal to all accrued interest on the
Loan.
(b) On the last day of each month during the period beginning July 1,
1997, and continuing through December 31, 1997, Borrower shall make principal
reduction payments to U. S. Bank each in an amount equal to the lesser of:
(i) $107,166; or
(ii) an amount calculated as follows:
((ECF - 2,000,000) DIVIDED BY 2) DIVIDED BY 6 = Monthly Payment Amount
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ECF = Excess Cash Flow from April 1, 1996 through June 30, 1997.
(c) On the last day of each month during the period beginning January
1, 1998, and continuing through June 30, 1998, Borrower shall make principal
reduction payments to U. S. Bank each in an amount equal to the lesser of:
(i) $107,166; or
(ii) an amount calculated as follows:
((ECF - 1,000,000) DIVIDED BY 2) DIVIDED BY 6 = Monthly Payment Amount
ECF = Excess Cash Flow from July 1, 1997 through December 31, 1997.
(d) On the last day of each month during the period beginning July 1,
1998, and continuing through June 30, 1999, Borrower shall make principal
reduction payments to U. S. Bank each in the amount of $107,166.
(e) Borrower shall pay U. S. Bank all outstanding principal, accrued
interest, and other charges with respect to the Loan on June 30, 1999.
2.8 FUNDINGS.
(a) U. S. Bank is hereby authorized by Borrower to make Fundings
under the Loan upon receipt for each Funding of a written request therefor
(including written requests communicated by facsimile) ("Borrowing Notice") from
Fredric D. Rosen, Peter B. Knepper, or any successor to Mr. Knepper's position
as chief financial officer of Borrower, each of whom is authorized to request
Fundings and direct the disposition of any such Fundings until written notice by
Borrower of the revocation of such authority is received by U. S. Bank. Any
such Funding shall be conclusively presumed to have been made to or for the
benefit of Borrower when made in accordance with such a request and direction
for disposition or when such Funding is deposited to the credit of the account
of Borrower with U. S. Bank or is transmitted to any other bank with directions
to credit the same to the account of Borrower at such bank, regardless of
whether persons other than those authorized hereunder to make requests for
Fundings have authority to draw against any such account.
(b) Borrower acknowledges that U. S. Bank cannot effectively
determine whether a particular request for a Funding is valid, authorized, or
authentic. It is nevertheless important to Borrower that it has the privilege
of making requests for Fundings in accordance with SECTION 2.6(a) hereof.
Therefore, to induce U. S. Bank to lend funds in response to such requests and
in consideration for U. S. Bank's agreement to receive and consider such
requests, Borrower assumes all risk of the validity, authenticity, and
authorization of such
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requests, whether or not the individual making such requests has authority to
request Fundings and whether or not the aggregate sum owing exceeds the maximum
principal amount referred to above. U. S. Bank shall not be responsible under
principles of contract, tort (other than U. S. Bank's gross negligence), or
otherwise for the amount of an unauthorized or invalid Funding; rather, Borrower
agrees to repay any sums with interest as provided herein.
2.9 LOAN FEE. Concurrently with the execution of this Agreement,
Borrower shall pay U. S. Bank a nonrefundable fee for the Loan in the amount of
$37,500, less any portion of such fee previously paid by Borrower.
2.10 LETTERS OF CREDIT.
(a) Subject to and upon the terms and conditions set forth herein and
in reliance upon the representations, warranties, and covenants of Borrower
contained herein or made pursuant hereto, U. S. Bank will issue standby and
commercial letters of credit in an aggregate amount not to exceed $200,000 at
any one time outstanding (the "Letters of Credit") for the benefit of Borrower
in forms acceptable to U. S. Bank from time to time and for the period ending on
June 30, 1999. The expiration date of any Letter of Credit shall not extend
beyond September 30, 1999. The maximum aggregate amount of outstanding Letters
of Credit plus the aggregate outstanding amount of principal on the Loan shall
not exceed, at any one time, an amount equal to the initial principal amount of
the Loan less the aggregate amount of principal reduction payments required
pursuant to SECTION 2.7 herein.
(b) Borrower shall pay to U. S. Bank a fee for the issuance of each
Letter of Credit in an amount equal to U. S. Bank's customary fees and handling
charges.
(c) Any draws on Letters of Credit issued by U. S. Bank pursuant to
the terms of this Agreement shall be paid by Borrower immediately upon receipt
of notice from U. S. Bank of such draw. So long as Borrower meets the
conditions to Fundings under the Loan, draws on Letters of Credit may be paid
from Fundings under the Loan during the Revolving Period. In the event Borrower
fails to make such immediate repayment, U. S. Bank shall be authorized to
consider any such draws as Fundings under the Loan. In the event Borrower is in
Default under the terms of this Agreement on the date of any such draw, such
draw will nevertheless constitute a Funding on the Loan and shall not constitute
a waiver of any of U. S. Bank's rights hereunder or under any of the other Loan
Documents. In the event that any Letters of Credit are outstanding upon the
expiration of the Loan, Borrower shall, upon U. S. Bank's request, deposit with
U. S. Bank in a special demand deposit account set up by Borrower, an amount of
cash necessary to cover all outstanding Letters of Credit. Borrower hereby
grants U. S. Bank a security interest in any such demand deposit account and
gives U. S. Bank the authority to debit such account upon a draw on outstanding
Letters of Credit in an amount equal to the amount paid by U. S. Bank to the
beneficiaries of such Letters of Credit. In the event Borrower does not
establish such an account, or in the event
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the amount of funds in such account are insufficient to satisfy the obligations
of U. S. Bank under all outstanding Letters of Credit, then all payments made by
U. S. Bank under such Letters of Credit shall automatically constitute Fundings
under the Loan, notwithstanding the fact that the Loan has expired. U. S. Bank
shall maintain possession of the Note until all Letters of Credit have either
expired, been canceled, or been paid by U. S. Bank and U. S. Bank has been
reimbursed in full.
(d) Borrower's obligation to reimburse U. S. Bank for all draws on
Letters of Credit issued pursuant to the provisions of this Agreement shall be
secured by all of U. S. Bank's security interests in the Collateral, which
security interests shall survive and continue in full force and effect until all
Letters of Credit have expired and all reimbursement obligations of Borrower
with respect to all Letters of Credit have been satisfied in full.
ARTICLE III. GENERAL PROVISIONS APPLICABLE TO THE LOAN
3.1 MANNER OF PAYMENT. All sums payable to U. S. Bank pursuant to
this Agreement shall be paid directly to U. S. Bank in immediately available
United States funds. Whenever any payment to be made hereunder or on any of the
Note becomes due and payable on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day and such extension of time shall
in such case be included in computing interest on such payment.
3.2 STATEMENTS. U. S. Bank shall send Borrower statements of all
amounts due hereunder; the statements shall be considered correct and
presumptively correct, absent manifest error, on Borrower unless Borrower
notifies U. S. Bank to the contrary within 30 days of receipt of any statement
that Borrower claims to be incorrect. Borrower agrees that accounting entries
made by U. S. Bank with respect to Borrower's loan accounts shall constitute
evidence of all Fundings made under and payments made on the Loan. Without
limiting the methods by which U. S. Bank may otherwise be entitled by Applicable
Law to make demand for payment of the Loan upon Borrower, Borrower agrees that
any statement, invoice, or payment notice from U. S. Bank to Borrower with
respect to any principal or interest obligation of Borrower to U. S. Bank shall
be deemed to be a demand for payment in accordance with the terms of such
statement, invoice, or payment notice. Under no circumstances shall a demand by
U. S. Bank for partial payment of principal or interest or both be construed as
a waiver by U. S. Bank of its right thereafter to demand and receive payment (in
part or in full) of any remaining principal or interest obligation.
3.3 BOOK ENTRY LOAN ACCOUNT. U. S. Bank shall establish a book entry
loan account for the Loan in which U. S. Bank will make debit entries of all
Fundings pursuant to the terms of this Agreement. U. S. Bank will also record
in the applicable loan account, in accordance with customary banking practices,
all interest and other charges,
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expenses, and other items properly chargeable to Borrower, if any, together with
all payments made by Borrower on account of the Indebtedness evidenced by
Borrower's respective loan accounts and all other sums credited to the
respective loan accounts. The debit balance of Borrower's respective loan
accounts shall reflect the amount of Borrower's Indebtedness to U. S. Bank from
time to time by reason of advances, charges, payments, or credits.
3.4 COMPUTATIONS OF INTEREST. All computations of interest shall be
based on a 360-day year for the actual number of days elapsed.
3.5 DEFAULT INTEREST. Upon the occurrence and during the continuance
of any Event of Default, U. S. Bank may, at its option, raise the interest rate
charged on the Loan to a rate of up to the applicable Note rate plus 2.5 percent
per annum from the date of the occurrence of the Event of Default until the
Event of Default is cured or waived by U. S. Bank or, absent cure or waiver,
until the Loan is repaid in full.
3.6 MAXIMUM INTEREST RATE. Notwithstanding any provision contained
herein or in the Note, the total liability of Borrower for payment of interest
pursuant hereto, including late charges, shall not exceed the maximum amount of
interest permitted by Applicable Law to be charged, collected, or received from
Borrower; and if any payments by Borrower include interest in excess of that
maximum amount, U. S. Bank shall apply the excess first to reduce the unpaid
balance of the Loan, then to reduce the balance of any other Indebtedness of
Borrower to U. S. Bank. If there is no such Indebtedness, the excess shall be
promptly returned to Borrower.
3.7 LATE CHARGE. If any payment of principal or interest required
under the Loan is 15 days or more past due, Borrower will be charged a late
charge of 5 percent of the delinquent payment or $5, whichever is greater,
subject to a maximum late charge of $100 for each such late payment. The 15 day
period provided for herein shall not be construed as a waiver of any Default or
Event of Default resulting from any late payment under the Loan.
3.8 PREPAYMENTS. All prepayments of all or any portion of the Loan
shall not be subject to a prepayment charge. All prepayments shall be applied
to the Loan being prepaid in the inverse order of maturity. Borrower shall not
prepay any IBOR Rate Borrowings.
3.9 OTHER LOAN DOCUMENTS. Borrower and U. S. Bank acknowledge and
agree that the Loan Documents executed in connection with or pursuant to the
Original Agreement shall remain in full force and effect and, to the extent any
Loan Documents created, perfected, or evidenced U. S. Bank's security interest
in the Collateral, they shall continue to secure payment and performance of the
Loan and all other Indebtedness of Borrower to U. S. Bank. Without limiting the
foregoing or the scope of the parties'
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ratification, the following Loan Documents are hereby expressly ratified and
reaffirmed by Borrower and U. S. Bank:
(a) Pledge and security agreement dated April 15, 1994, and executed
by Borrower for the benefit of U. S. Bank, a copy of which is attached to this
Agreement as EXHIBIT B ("Security Agreement"); and
(b) UCC financing statements for the states of Washington,
California, Colorado, and Delaware executed by Borrower for the benefit of
U. S. Bank.
3.10 TERMINATION OF KEEP-WELL AGREEMENT. Upon satisfaction of the
conditions precedent set forth in SECTION 4.1 herein, that certain keep-well
agreement dated as of April 15, 1994, and entered into among Ticketmaster,
Ticketmaster Cinema Group, Ltd., and U. S. Bank shall be deemed terminated.
3.11 EXTENSIONS, RENEWALS, AND MODIFICATIONS. Any extensions,
renewals, and modifications of the Loan shall be governed by the terms and
conditions of this Agreement and the other Loan Documents unless otherwise
agreed to in writing by U. S. Bank and Borrower.
ARTICLE IV. CONDITIONS PRECEDENT FOR FUNDINGS UNDER THE LOAN
4.1 CONDITIONS PRECEDENT FOR INITIAL FUNDING. This Agreement shall
not be effective unless or until the following conditions have been fulfilled to
the satisfaction of U. S. Bank:
(a) U. S. Bank shall have received this Agreement and the Note, duly
executed and delivered by the respective parties thereto.
(b) U. S. Bank shall have received, duly executed and delivered by
Ticketmaster Cinema Group, Ltd. and CAC, a pledge agreement in the form attached
hereto as EXHIBIT C (the "Pledge Agreement"), granting to U. S. Bank a first
priority and exclusive security interest in all of the joint venture interests
of Borrower.
(c) U. S. Bank shall have received an assignment for security of
Borrower's equity interest in CCS-Computel Computer Systeme GmbH ("Verpfandung
von Geschaftsanteilen"), in substantially the form attached hereto as EXHIBIT D,
duly executed by Borrower and the Computel Companies, and delivered by Borrower.
(d) U. S. Bank shall have received, duly executed and delivered by
Borrower and such other Persons as deemed necessary by U. S. Bank, such
financing
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statements and other documents deemed necessary by U. S. Bank to perfect the
security interest granted to U. S. Bank.
(e) U. S. Bank shall have received, duly executed and delivered by
Ticketmaster, an interest keep-well agreement in the form attached hereto as
EXHIBIT E (the "Interest Keep-Well Agreement").
(f) U. S. Bank shall have received, duly executed and delivered by
Ticketmaster Cinema Group, Ltd., and CAC, a subordination agreement in the forms
attached hereto as EXHIBIT F-1 and F-2 (the "Subordination Agreement").
(g) U. S. Bank shall have received from outside counsel for Borrower
and Ticketmaster, an opinion addressed to U. S. Bank and dated as of the date of
this Agreement, in the form attached hereto as EXHIBIT G.
(h) No Default or Event of Default hereunder shall exist, and after
having given effect to the requested Funding, no Default or Event of Default
shall exist.
(i) All representations and warranties of Borrower contained herein
or otherwise made in writing in connection herewith shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on and as of the date of the initial Funding.
(j) All proceedings of Borrower shall be satisfactory in form and
substance to U. S. Bank, and U. S. Bank shall have received all information and
copies of all documents, including records of all proceedings, that U. S. Bank
has requested in connection therewith, such documents where appropriate to be
certified by proper corporate authorities or Governmental Bodies. Borrower
shall provide U. S. Bank with the following documents prior to or upon the
execution of this Agreement:
(i) Copies of the joint venture agreement of Borrower,
together with all amendments thereto, certified by Borrower to be true and
complete;
(ii) A certified resolution of the joint venture partners of
Borrower in the form attached hereto as EXHIBIT H-1;
(iii) A certified resolution of the directors and incumbency
certificate of Ticketmaster Cinema Group, Ltd. and CAC in the forms
attached hereto as EXHIBIT H-2 and H-3; and
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(iv) A certified resolution of the directors of Ticketmaster
and incumbency certificate in the form attached hereto as EXHIBIT H-4.
(k) U. S. Bank shall have received such evidence deemed necessary by
U. S. Bank that U. S. Bank's security interests in the Collateral constitute
first priority and exclusive security interests, except for the Permitted Liens.
(l) U. S. Bank shall have received evidence reasonably deemed
satisfactory to U. S. Bank that the assets owned or to be acquired by Borrower
are adequately insured against casualty and property loss.
(m) U. S. Bank shall have received, duly executed and delivered by
Borrower and each of the Computel Companies, all security agreements, financing
statements, assignments, and other agreements and documents reasonably deemed
necessary by U. S. Bank in order for U. S. Bank to obtain an exclusive perfected
security interest in all assets owned by such Persons (subject to the Permitted
Liens), including, without limitation, all assets owned by such Persons and
located outside of the United States, together with opinions of outside counsel
to such Persons in form and substance reasonably satisfactory to U. S. Bank.
(n) U. S. Bank shall have received such evidence deemed necessary by
U. S. Bank that U. S. Bank's security interests in the Collateral located
outside of the United States constitute first priority and exclusive security
interests, except as otherwise provided herein.
4.2 CONDITIONS PRECEDENT TO EACH SUBSEQUENT FUNDING. The obligation
of U. S. Bank to make any Funding subsequent to the initial Funding hereunder is
subject to the fulfillment, to the reasonable satisfaction of U. S. Bank, of the
following:
(a) The conditions set forth in SECTION 4.1 shall have been
previously satisfied, and U. S. Bank shall have received evidence reasonably
satisfactory to U. S. Bank of satisfaction thereof.
(b) U. S. Bank shall have received a Borrowing Notice for each
requested Funding under the Loan.
(c) There shall be executed and delivered to U. S. Bank such further
instruments, agreements, and documents, as may be reasonably necessary or proper
in the opinion of U. S. Bank to confirm the obligations of Borrower to
U. S. Bank hereunder, the grant of security therefor, and the proper use of the
proceeds of all Fundings.
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(d) The representations and warranties of Borrower in ARTICLE VII
herein shall be true on the date of each Funding with the same force and effect
as if made on and as of that date.
(e) No Default or Event of Default shall exist, and after having
given effect to the requested Funding, no Default or Event of Default shall
exist.
(f) To the extent not previously delivered, all other documents,
agreements, and instruments from or with respect to Borrower or any other Person
that may be called for hereunder shall be duly executed and delivered to
U. S. Bank, including but not limited to all documents, agreements, and
instruments deemed necessary by U. S. Bank to perfect its security interest in
Collateral acquired after the date of this Agreement. For the purposes of this
Agreement, the waiver of delivery of any document, agreement, or instrument from
or with respect to Borrower or any other Person does not constitute a continuing
waiver with respect to the obligation to fulfill the conditions precedent to
each Funding hereunder.
ARTICLE V. AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that so long as this Agreement is
in effect, and until the Loan, together with interest thereon, and all other
obligations incurred hereunder are paid or satisfied in full, Borrower shall:
5.1 FINANCIAL DATA. Keep its books of account in accordance with
generally accepted accounting principles, consistently applied, and furnish to
U. S. Bank:
(a) As soon as practicable and in any event within 30 days after the
close of each calendar month of Borrower, the following unaudited Consolidated
financial statements of Borrower for each such month, all in reasonable detail
and certified by Borrower to be true and correct: balance sheet and statement
of income.
(b) As soon as practicable and in any event within 30 days after the
close of each fiscal quarter of Borrower, a Consolidated statement of cash flows
of Borrower for each such fiscal quarter, in reasonable detail and certified by
Borrower to be true and correct, which statement shall include a calculation of
the financial covenants provided for in ARTICLE VI herein.
(c) As soon as practicable and in any event within 90 days after the
close of each fiscal year of Borrower, the following Consolidated financial
statements of Borrower, setting forth the corresponding figures for the previous
fiscal year in comparative form where appropriate, all in reasonable detail and
audited (without any qualification or exception deemed material by U. S. Bank)
by Borrower's current independent certified public accountant or such
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other independent certified public accountants selected by Borrower and
reasonably satisfactory to U. S. Bank: balance sheet, statement of income, and
statement of cash flows. Borrower shall provide U. S. Bank with a copy of its
independent certified public accountants' management letter or other similar
report or correspondence to Borrower.
(d) As soon as practicable and in any event within 30 days after the
close of each fiscal quarter of Borrower, certificates signed by Borrower,
stating that during such period no Default or Event of Default existed or if any
such Default or Event of Default existed, specifying the nature thereof, the
period of existence thereof, and what action Borrower proposes to take or has
taken with respect thereto, and for certificates prepared as of the end of each
fiscal quarter of Borrower, that during such period Borrower was in compliance
with all of the financial covenants set forth in ARTICLE VI herein; and promptly
upon the occurrence of any Default or Event of Default, a certificate signed by
Borrower, specifying the nature thereof, the period of existence thereof, and
what action Borrower proposes to take or has taken with respect thereto.
(e) As soon as practicable and in any event within 30 days after the
close of each fiscal quarter of Borrower, a certificate executed by Borrower
comparing Borrower's projected statements of income with actual results of
operation.
(f) As soon as practicable and in any event within 20 days after the
close of each calendar month of Borrower, accounts receivable and accounts
payable agings for each such month in a form and in such detail as is acceptable
to U. S. Bank.
(g) As soon as practicable and in any event within 90 days after the
beginning of each fiscal year, a statement projecting all capital expenditures
to be made or committed to during such fiscal year with respect to Borrower and
the Computel Companies.
(h) As soon as practicable and in any event within 90 days after the
beginning of each fiscal year, a projection of the financial operations of
Borrower and the Computel Companies for such year in a form and in such detail
as is reasonably acceptable to U. S. Bank.
(i) With reasonable promptness, such other information regarding the
business, operations, and financial condition of Borrower and the Computel
Companies as U. S. Bank may from time to time reasonably request.
5.2 LICENSES AND PERMITS. Maintain all Governmental Approvals and
all related or other material agreements necessary for Borrower and the Computel
Companies to operate their businesses, as they now exist or as they may be
modified or expanded. Borrower and the Computel Companies will at all times
comply with all Applicable Laws relating to the operations, facilities, or
activities of Borrower and the Computel Companies.
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5.3 MAINTENANCE OF PROPERTIES. Keep Borrower's properties in good
repair and in good working order and condition, in a manner consistent with past
practices and comparable to industry standards; from time to time make all
appropriate and proper repairs, renewals, replacements, additions, and
improvements thereto; and keep all equipment that may now or in the future be
subject to compliance with any Applicable Laws in full compliance with such
Applicable Laws.
5.4 PAYMENT OF CHARGES. Duly pay and discharge all material
(a) taxes, assessments, levies, and any other charges of Governmental Bodies
imposed on or against Borrower, the Computel Companies, or their property or
assets, or upon any property leased by Borrower or the Computel Companies, prior
to the date on which penalties attached thereto, unless and to the extent only
that such taxes, assessments, levies, and any other charges of Governmental
Bodies, after written notice thereof having been given to U. S. Bank, are being
contested in good faith and by appropriate proceedings, (b) claims allowed by
Applicable Laws, whether for labor, materials, rentals, or anything else, which
could, if unpaid, become a lien or charge upon Borrower's or the Computel
Companies' property or assets or the outstanding capital stock of Borrower or
the Computel Companies or adversely affect the facilities or operations of
Borrower or the Computel Companies (unless and to the extent only that the
validity thereof is being contested in good faith and by appropriate proceedings
after written notice thereof has been given to U. S. Bank); (c) trade bills in
accordance with the terms thereof or generally prevailing industry standards;
and (d) other Indebtedness heretofore or hereafter incurred or assumed by
Borrower or the Computel Companies, unless such Indebtedness be renewed or
extended. In the event any charge is being contested by Borrower or the
Computel Companies as allowed above, Borrower or the Computel Companies (as the
case may be), shall establish adequate reserves against possible liability
therefor, if required by generally accepted accounting principles.
5.5 INSURANCE.
(a) Maintain insurance upon Borrower's and the Computel Companies'
properties with financially sound and reputable insurance companies in such
amounts and covering such risks as are usually carried by companies engaged in
the same or similar businesses, which insurance may provide for reasonable
limits on and deductibility from coverage.
(b) From time to time, upon request by U. S. Bank, promptly furnish
or cause to be furnished to U. S. Bank a broker's certificate evidencing the
maintenance of all insurance, indemnities, or bonds required by this
SECTION 5.5, and lender loss payable endorsements naming U. S. Bank as an
additional loss payee, in a form reasonably acceptable to U. S. Bank.
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5.6 MAINTENANCE OF RECORDS. Keep at all times books of account and
other records in which full, true, and correct entries will be made of all
dealings or transactions in relation to the business and affairs of Borrower and
the Computel Companies
5.7 INSPECTION. After not fewer than ten days' prior written notice
to Borrower, allow any representative of U. S. Bank to visit and inspect any of
the properties of Borrower or the Computel Companies, to examine the books of
account and other records and files of Borrower or the Computel Companies, to
make copies thereof, and to discuss the affairs, business, finances, and
accounts of Borrower or the Computel Companies with their officers, employees,
and accountants, all at such reasonable times and as often as U. S. Bank may
desire. This right of inspection shall specifically include U. S. Bank's
collateral and financial examinations. Any such visits and inspections shall be
at U. S. Bank's cost, unless any such visits or inspections occur during the
existence of an Event of Default, in which case Borrower shall reimburse
U. S. Bank for such costs upon demand by U. S. Bank.
5.8 HAZARDOUS SUBSTANCES.
(a) Borrower hereby covenants and agrees that so long as any
Indebtedness of Borrower to U. S. Bank is outstanding:
(i) Borrower and the Computel Companies will not permit
their property or any portion thereof to be a site for the storage, use,
generation, manufacture, disposal or transportation of Hazardous Materials;
(ii) Borrower and the Computel Companies will not permit any
Hazardous Materials to be disposed of off their property other than in
properly licensed disposal sites;
(iii) Borrower and the Computel Companies, at their sole cost
and expense, will keep and maintain its property and each portion thereof
in compliance with and shall not cause or permit its property or any
portion thereof to be in violation of any Hazardous Materials Laws; and
(iv) Borrower will immediately advise U. S. Bank in writing
of any Hazardous Material Claim.
(b) Borrower agrees to indemnify U. S. Bank and hold U. S. Bank
harmless from and against any and all claims, demands, damages, losses, liens,
liabilities, penalties, fines, lawsuits, and other proceedings and costs and
expenses (including reasonable attorney fees), arising directly or indirectly
from or out of or in any way connected with (i) the accuracy of the
representations contained in SECTION 7.16 herein; (ii) any activities on the
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property of Borrower or the Computel Companies during their ownership,
possession, or control thereof which directly or indirectly results in such
property or any other property becoming contaminated with Hazardous Materials;
(iii) the discovery of Hazardous Materials on the property of Borrower or the
Computel Companies; (iv) the cleanup of Hazardous Materials from the property of
Borrower or the Computel Companies; and (v) the discovery of Hazardous Materials
or the cleanup of Hazardous Materials from adjacent or other property that has
become contaminated as a result of any activity on the property of Borrower or
the Computel Companies. As between Borrower and U. S. Bank, Borrower
acknowledges that it will be solely responsible for all costs and expenses
relating to the cleanup of Hazardous Materials from the property of Borrower or
the Computel Companies, or from any other properties that become contaminated
with Hazardous Materials as a result of activities on or the contamination of
such property.
(c) Borrower's obligations under this SECTION 5.8 are unconditional
and shall not be limited by any nonrecourse or other limitations of liability
provided for in the Loan Documents. The representations, warranties, and
covenants of Borrower set forth in this SECTION 5.8 and SECTION 7.16 herein
(including but not limited to the indemnity provided for in SECTION 5.8(b)
above) shall survive the closing and repayment of the Loan to U. S. Bank;
and, to the extent permitted by Applicable Laws and Hazardous Materials Laws,
shall survive the transfer of property by foreclosure proceedings (whether
judicial or nonjudicial), deed in lieu of foreclosure, or otherwise. Borrower
acknowledges and agrees that its covenants and obligations hereunder are
separate and distinct from its other obligations under the Loan and the Loan
Documents.
5.9 EXISTENCE. Maintain and preserve the existence of Borrower.
5.10 EXCHANGE OF NOTE. Upon receipt of a written notice of loss,
theft, destruction, or mutilation of a Note, and upon surrendering such Note for
cancellation if mutilated, execute and deliver a new Note or a Note of like
tenor in lieu of such lost, stolen, destroyed, or mutilated Note. Any Note
issued pursuant to this SECTION 5.10 shall be dated so that neither gain nor
loss of interest shall result therefrom.
5.11 MAINTENANCE OF LIENS. At all times maintain the liens and
security interests provided under or pursuant to this Agreement as valid and
perfected first liens and security interests on the property and assets intended
to be covered thereby, subject to the Permitted Liens. Except as contemplated
under SECTION 6.5, Borrower shall take all action requested by U. S. Bank
reasonably necessary to assure that U. S. Bank has valid and exclusive liens and
security interests in all Collateral.
5.12 OTHER AGREEMENTS. Comply with all material covenants and
agreements set forth in or required pursuant to any of the other Loan Documents.
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5.13 AFTER-ACQUIRED COLLATERAL. Upon request by U. S. Bank, execute
and deliver to U. S. Bank all documents in order to effectuate the proper
granting and perfection of a first priority security interest in or assignment
of all property to U. S. Bank, whether personal, real, or mixed, hereafter
acquired by Borrower or the Computel Companies, concurrently with the
acquisition thereof, including, without limitation, all future registrations of
trademarks, service marks, and trade names with or such trademarks, service
marks, and trade names are owned as of the date of this Agreement or hereafter
acquired by Borrower or the Computel Companies. This provision shall also apply
to all future patents obtained by Borrower or the Computel Companies. Borrower
shall promptly notify U. S. Bank of the acquisition or registration of any and
all trademarks, service marks, trade names, patents, and instruments acquired or
obtained by Borrower or any of the Computel Companies subsequent to the date of
this Agreement.
5.14 FURTHER ASSURANCES. Within ten Business Days of written request
by U. S. Bank, duly execute and deliver or cause to be duly executed and
delivered to U. S. Bank such further instruments, agreements, and documents and
do or cause to be done such further acts as may be necessary or proper in the
reasonable opinion of U. S. Bank to carry out more effectively the provisions
and purpose of this Agreement and the other Loan Documents.
5.15 MAINTENANCE OF BANK ACCOUNTS. As security for repayment of the
Loan, maintain its principal depository accounts with U. S. Bank and effectuate
the transfer of such accounts within a reasonable period of time after execution
of this Agreement. Borrower hereby grants to U. S. Bank a security interest in
all such accounts in order to secure the obligations of Borrower hereunder.
Notwithstanding anything to the contrary herein or in the other Loan Documents,
U. S. Bank's security interest shall exclude all Client Accounts.
ARTICLE VI. NEGATIVE COVENANTS
Borrower covenants and agrees that until the Loan, together with
interest thereon, and all other obligations incurred hereunder are paid or
satisfied in full, Borrower shall not, without the prior written consent of
U. S. Bank:
6.1 DIVIDENDS AND DISTRIBUTIONS. Declare or pay any cash
distributions or dividends or return any capital to any of Borrower's joint
venture partners; authorize or make any distribution, payment, or delivery of
property or cash to any of Borrower's joint venture partners; redeem, retire,
purchase, or otherwise acquire, directly or indirectly, for consideration, any
shares or other interests of Borrower now or hereafter outstanding; or set aside
any funds for any of the foregoing purposes. Notwithstanding the foregoing, so
long as their exists no Event of Default and so long as any such payment or
distribution would not result in the existence of any Event of Default, Borrower
shall be permitted to make distributions to its joint venture partners in an
amount necessary to cover the actual
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incremental increase in the taxes of each joint venture partner due to the pass
through of Borrower's net income under Subchapter K of the Internal Revenue Code
or other relevant domestic or foreign tax authority. Borrower acknowledges and
agrees that the taxes assessed against any joint venture partner due to such
earnings may be less than such joint venture partner's maximum marginal tax
rate, and only the incremental difference actually paid or payable in any tax
year is exempt from the distribution restrictions set forth in this SECTION 6.1.
6.2 TRANSACTIONS WITH AFFILIATES. Except as provided in SECTION 6.6
herein, enter into any transaction, other than an arm's length transaction: in
which an Affiliate of Borrower shall have any interest; or make any payment or
agree to make any payment to any such Affiliate; or transfer or agree to
transfer ownership or possession of any of its business or assets, tangible or
intangible, real, personal, or mixed, to any Affiliate. Notwithstanding the
foregoing, so long as there exists no Event of Default, Borrower may pay
Ticketmaster Cinema Group, Ltd., the management fee provided for in the Joint
Venture Agreement of Borrower, as it exists as of the date of this Agreement.
6.3 OTHER INDEBTEDNESS. Create, incur, assume, or suffer to exist,
contingently or otherwise, any Indebtedness or contingent liabilities except
(a) Indebtedness represented by the Note; (b) accounts and other current
payables arising from the ordinary course of business; (c) any Indebtedness that
is a deferred item in accordance with generally accepted accounting principles,
consistently applied; (d) any refunding or renewal, without increase in
principal amount, of any accepted Indebtedness under this SECTION 6.3; and
(e) additional Indebtedness outstanding or committed to at any time (including
but not limited to indebtedness evidenced by notes, bonds, debentures, leases,
purchase agreements, and other contractual obligations) not in excess of an
aggregate amount at any one time outstanding of $500,000. Notwithstanding
clause (e) above, Borrower may not guarantee or become contingently liable for
the obligation of any Person except as provided for herein. In computing the
additional indebtedness permitted by clause (e) hereof, all capital lease
payments due from Borrower within 12 months shall be included if the amounts of
such rental payments are not otherwise included as Indebtedness in accordance
with generally accepted accounting principles. Except as set forth in
SECTION 6.5 herein, none of the additional indebtedness permitted by this
SECTION 6.3 shall be secured by any of the Collateral.
6.4 LEASES AND LEASEBACKS. Except for arrangements entered into
prior to the date hereof, enter into any new agreement to rent or lease any
material real or personal property or enter into any arrangement with any bank,
insurance company, or other lender or investor providing for the leasing of any
real or personal property or equipment (a) that at the time has been or is sold
or transferred by Borrower to such lender or investor or (b) that has been or is
being acquired from another Person by such lender or investor or on which one or
more buildings have been or are to be constructed by such lender or investor,
for the purpose of leasing such property to Borrower. Borrower may, however,
enter into such leases in the ordinary course of business provided that there is
compliance with SECTION 6.3(e) hereof.
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6.5 LIENS. Contract, create, incur, assume, or suffer to exist any
mortgage, pledge, lien, or other charge or encumbrance of any kind (including
but not limited to the charge upon property purchased under conditional sales or
other title retention agreements) upon or grant any interest in any of its
property or the property of the Computel Companies whether now owned or
hereafter acquired, except (a) liens granted pursuant to this Agreement;
(b) liens in connection with worker's compensation, unemployment insurance, or
other social security obligations; (c) good faith deposits in connection with
bids, tenders, contracts, or leases or deposits to secure public statutory
obligations; (d) mechanic's, carrier's, repairmen's, or other like liens in the
ordinary course of business with respect to obligations that are not overdue or
that are being contested in good faith and for which appropriate reserves have
been established or for which deposits to obtain the release of such liens have
been made; (e) liens for taxes, assessments, levies, or charges of Governmental
Bodies imposed upon Borrower or its property, operations, income, products, or
profits that are not at the time due or payable or for which, if the validity
thereof is being contested in good faith by legal or administrative proceedings,
appropriate reserves have been established; (f) encumbrances consisting of
zoning regulations, easements, rights-of-way, survey exceptions, and other
similar restrictions on the use of real property or minor irregularities in
title thereto that do not materially impair the use of such property in the
operation of the business of Borrower; (g) liens arising out of judgments or
awards with regard to which Borrower shall be prosecuting an appeal in good
faith and for which a stay of execution has been issued and appropriate reserves
established; (h) purchase money security interests that shall not exceed
$100,000 in the aggregate; and (i) the currently existing liens listed on
EXHIBIT I hereto. The liens described in clauses (a) through (i) herein are
called the "Permitted Liens."
6.6 ADVANCES AND LOANS. Lend money, make credit available (other
than: (a) extensions of credit in the ordinary course of business to customers,
and (b) loans to Borrower's employees not to exceed $100,000 in the aggregate),
or lend property or the use thereof to any Person; purchase or repurchase the
stock or Indebtedness or all or a substantial part of the assets or properties
of any Person; guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly or by any instrument having the effect of assuring any
Person's payment, performance, or capability) the Indebtedness, performance,
obligations, stock, or dividends of any Person; or agree to do any of the
foregoing; but Borrower may endorse negotiable instruments for deposit or
collection in the ordinary course of business.
6.7 INVESTMENTS. Invest in (by capital contribution or otherwise),
acquire, purchase, or make any commitment to purchase the obligations, stock, or
equity of any Person except (a) direct obligations of the government of the
United States of America or any agency or instrumentality thereof,
(b) interest-bearing certificates of deposit or repurchase agreements issued by
any commercial banking institution satisfactory to U. S. Bank, or (c) stock or
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obligations issued in settlement of claims of Borrower against others by reason
of bankruptcy or a composition or readjustment of debt or reorganization of any
debtor of Borrower.
6.8 CONSOLIDATION, MERGER, AND SALE OF ASSETS. Wind up, liquidate,
or dissolve the affairs Borrower or any of the Computel Companies or enter into
any transaction of merger or consolidation with any Person; convey, sell, lease,
or otherwise dispose of (or agree to do any of the foregoing at any time) any of
its material licenses, contracts, or permits; sell all or a substantial part of
their property or assets or sell any part of their property or assets necessary
or desirable for the conduct of their business as now generally conducted or as
proposed to be conducted; sell any of its notes receivable, installment or
conditional sales agreements, or accounts receivable; purchase, lease, or
otherwise acquire all or a substantial part of the property or assets of any
other Person.
6.9 SUBSIDIARIES. Form or acquire any Person or any portion thereof
without concurrently providing to U. S. Bank all security agreements, financing
statements, assignments, pledge agreements, stock certificates, and other
documents reasonably deemed necessary by U. S. Bank in order for U. S. Bank to
obtain a valid, first priority, perfected security interest in all assets of
such Person and in the capital stock, partnership interests, or other evidence
of ownership of Borrower of such Person.
6.10 TYPE OF BUSINESS. Enter into any business which is substantially
different from or not connected with the business in which Borrower and the
Computel Companies are presently engaged or make any substantial change in the
nature of their business or operations.
6.11 CHANGE OF CHIEF EXECUTIVE OFFICE OR NAME. Change (a) the chief
executive office of Borrower or the Computel Companies, (b) Borrower's or the
Computel Companies name, or (c) the location of any of the Collateral; or adopt
or use any trade name without (x) prior written notice to U. S. Bank and (y) the
execution, delivery, and filing (and payment of filing fees and taxes) of all
such documents as may be reasonably necessary or advisable in the opinion of
U. S. Bank to continue to perfect and protect the liens and security interests
in the Collateral.
6.12 CHANGE IN DOCUMENTS. Amend, supplement, terminate, or otherwise
modify in any way Borrower's joint venture agreement.
6.13 CONTROL. Enter into any agreement (other than employment
agreements) with any Person that confers upon such Person the right or authority
to control or direct a major portion of the business or assets of Borrower or
any of the Computel Companies.
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6.14 PENSION PLAN. Terminate or partially terminate any Plan now
existing or hereafter established for Borrower or withdraw from participation
therein under circumstances that result or could result in a material liability
to the Pension Benefit Guaranty Corporation, to the fund by which the Plan is
funded, or to the employees (or their beneficiaries) for whom the Plan is or
shall be maintained; or permit any other event or circumstance to occur that
results or could result in a material liability to the Pension Benefit Guaranty
Corporation or a violation of ERISA.
6.15 TANGIBLE NET WORTH. As of the end of each fiscal quarter of
Borrower, permit Tangible Net Worth to be less than the following:
FISCAL QUARTER TANGIBLE NET
OF BORROWER WORTH
-------------- -----------
1st & 2nd 1996 ($3,250,000)
3rd & 4th 1996 ($2,750,000)
1st & 2nd 1997 ($2,250,000)
3rd & 4th 1997 ($1,750,000)
1st & 2nd 1998 ($1,250,000)
3rd & 4th 1998 ($600,000)
1st & 2nd 1999 $-0-
6.16 INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio to
be less than 1.0:1.0 during any fiscal quarter of Borrower.
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6.17 CURRENT RATIO. As of the end of each fiscal quarter of Borrower,
permit the Current Ratio to be less than the following:
FISCAL QUARTER
OF BORROWER CURRENT RATIO
-------------- ---------
1st & 2nd 1996 1.30:1.00
3rd & 4th 1996 1.35:1.00
1st & 2nd 1997 1.40:1.00
3rd & 4th 1997 1.45:1.00
1st & 2nd 1998 1.50:1.00
3rd & 4th 1998 1.50:1.00
1st & 2nd 1999 1.50:1.50
6.18 WORKING CAPITAL. As of the end of each fiscal quarter of
Borrower, permit Working Capital to be less than the following:
FISCAL QUARTER WORKING CAPITAL
OF BORROWER
-------------- ---------------
1st, 2nd, 3rd
& 4th 1996 $3,000,000
Each Quarter Thereafter $3,500,000
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
In order to induce U. S. Bank to enter into this Agreement and to make
the Loan as herein provided, Borrower hereby makes the following
representations, covenants, and warranties, all of which shall survive the
execution and delivery of this Agreement and shall not be affected or waived by
any inspection or examination made by or on behalf of U. S. Bank:
7.1 STATUS. Borrower is a joint venture organized and validly
existing under the laws of the state of Delaware. Borrower has the power and
authority to own its property and assets and to transact the business in which
it is engaged or presently proposes to
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engage. Borrower is qualified to do business in all states except where the
failure to be qualified could not have a material adverse effect on Borrower.
7.2 POWER AND AUTHORITY. Borrower has the power to execute, deliver,
and carry out the terms and provisions of this Agreement and each of the Loan
Documents and has taken all necessary action to authorize the execution,
delivery, and performance of this Agreement and the other Loan Documents, the
borrowings hereunder, and the making and delivery of the Note and all Loan
Documents delivered hereunder. This Agreement constitutes, the Note and other
Loan Documents and instruments issued or to be issued hereunder, when executed
and delivered pursuant hereto, constitute or will constitute the authorized,
valid, and legally binding obligations of Borrower enforceable in accordance
with their respective terms.
7.3 NO VIOLATION OF AGREEMENTS. Borrower is not in default under any
material provision of any material agreement to which it is a party or in
violation of any material Applicable Laws. The execution and delivery of this
Agreement, the Note, the other Loan Documents, and the instruments incidental
hereto; the consummation of the transactions herein or therein contemplated; and
compliance with the terms and provisions hereof or thereof (a) will not violate
any material Applicable Law and (b) will not conflict or be inconsistent with;
result in any breach of any of the material terms, covenants, conditions, or
provisions of; constitute a default under; or result in the creation or
imposition of (or the obligation to impose) any lien, charge, or encumbrance
upon any of the property or assets of Borrower pursuant to the terms of: any
material Governmental Approval, mortgage, deed of trust, material lease,
material agreement, or other material instrument to which Borrower is a party,
by which Borrower may be bound, or to which Borrower may be subject, and
(c) will not violate any of the provisions of the joint venture agreement of
Borrower. No Governmental Approval is necessary (x) for the execution of this
Agreement, the making of the Note, or the assumption and performance of this
Agreement or the Note by Borrower or (y) for the consummation by Borrower of the
transactions contemplated by this Agreement including but not limited to the
grant of the security interests to U. S. Bank.
7.4 RECORDING AND ENFORCEABILITY. Neither the joint venture
agreement of Borrower nor any other agreements require recording, filing,
registration, notice, or other similar action in order to insure the legality,
validity, binding effect, or enforceability against all Persons of this
Agreement, the Note, or other Loan Documents executed or to be executed
hereunder, other than filings or recordings that may be required under the
Uniform Commercial Code or similar law or in connection with the perfection of
the security interests of U. S. Bank in patents, trademarks, and similar types
of Collateral.
7.5 LITIGATION. To the best of Borrower's knowledge, there are no
actions, suits, or proceedings pending or threatened against or affecting
Borrower before any Governmental Body that could have a material adverse effect
on Borrower or the Collateral,
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except potential liability arising out of the Promophone, Inc. and The
Teleticketing Company relationship. Borrower is not in default under any
material provision of any Applicable Law or Governmental Approval of any
Governmental Body which has or will have a material adverse effect on Borrower
or on the Collateral.
7.6 GOOD TITLE TO PROPERTIES. Borrower and the Computel Companies
have good and marketable title to, or a valid leasehold interest in, their
property and assets, subject to no liens, mortgages, pledges, encumbrances, or
charges of any kind, except those permitted under the provisions of SECTION 6.5
of this Agreement.
7.7 LICENSES AND PERMITS. All Governmental Approvals with respect to
the business of Borrower and the Computel Companies were to Borrower's knowledge
duly and validly issued by the respective Governmental Bodies, are in full force
and effect, and are to Borrower's knowledge valid and enforceable in accordance
with their terms. With regard to such Governmental Approvals, no fact or
circumstance exists that constitutes or, with the passage of time or the giving
of notice or both, would constitute a material default under any thereof, or
permit the grantor thereof to cancel or terminate the rights thereunder, except
upon the expiration of the full term thereof. Borrower and the Computel
Companies presently hold all material Governmental Approvals as are necessary or
advisable in connection with the conduct of their business as now conducted and
as presently proposed to be conducted.
7.8 PROPERTIES IN GOOD CONDITION. All the material properties of
Borrower are, and all material properties to be added in connection with any
contemplated expansion or acquisition will be in good repair and good working
order and condition in a manner consistent with past practices of Borrower, and
comparable to industry standards and are and will be in compliance with all
material Applicable Laws.
7.9 OUTSTANDING INDEBTEDNESS. Other than current trade payables,
Borrower has no Indebtedness or contingent liabilities, including but not
limited to Indebtedness to Affiliates, that is not listed on Borrower's balance
sheet dated as of March 31, 1996, and heretofore delivered to U. S. Bank.
7.10 TAXES. Borrower has duly filed all tax returns and reports
required by Applicable Law to be filed; and all taxes, assessments, levies,
fees, and other charges of Governmental Bodies upon Borrower or upon its assets
that are due and payable have been paid (except as otherwise permitted in this
Agreement).
7.11 LICENSE FEES. Borrower has paid all fees and charges that have
become due for any Governmental Approval for its business or has made adequate
provisions for any such fees and charges that have accrued.
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7.12 TRADEMARKS, PATENTS, ETC. Attached hereto as EXHIBIT J is a
schedule of all trademarks, trade names, service marks, patents, and
applications therefor currently held or to be acquired by Borrower or in which
it has an interest, e.g., a license. Borrower possesses all necessary
trademarks, trade names, service marks, copyrights, patents, patent rights, and
licenses to conduct its businesses as now and as proposed to be conducted,
without conflict with the rights or claimed rights of others.
7.13 DISCLOSURE. To the best of Borrower's knowledge, the exhibits
hereto, the financial information and statements referred to in SECTION 7.9
herein, any certificate, statement, report or other document furnished to
U. S. Bank by Borrower or any other Person in connection herewith or in
connection with any transaction contemplated hereby, and this Agreement, do not
contain any untrue statements of material fact or omit to state any material
fact necessary in order to make the statements contained therein or herein not
misleading.
7.14 REGULATIONS U AND X. Borrower does not own and no part of the
proceeds hereof will be used to purchase or carry any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System)
or to extend credit to others for the purpose of purchasing or carrying any
margin stock. Borrower is not engaged principally or as one of its important
activities in the business of extending credit for the purpose of purchasing or
carrying any margin stock. If requested by U. S. Bank, Borrower will furnish to
U. S. Bank a statement in conformity with the requirements of Federal Reserve
Form U-1 referred to in said Regulation. No part of the proceeds of the Loan
will be used for any purpose that violates or is inconsistent with the
provisions of Regulation X of said Board of Governors.
7.15 NAMES. Neither Borrower nor any of its predecessors operate or
do business or during the past five years have operated or done business under a
fictitious, trade, or assumed name.
7.16 CONDITION OF PROPERTY. Except as otherwise disclosed to
U. S. Bank, Borrower hereby represents and warrants to U. S. Bank that as of the
date hereof and continuing hereafter, Borrower's owned property and each portion
thereof (a) are not and to the best knowledge of Borrower have not been a site
for the use, generation, manufacture, storage, disposal, or transportation of
any Hazardous Material; (b) are presently in compliance with all Hazardous
Materials Laws; and (c) to Borrower's knowledge are not being used in any manner
that has resulted in or will result in Hazardous Materials being spilled or
disposed of on any adjacent or other property.
7.17 PENSION PLANS. No "reportable event" as defined in
Section 4043(b) of Title IV of ERISA for which the 30-day notice period has not
been waived has occurred and is continuing with respect to any plan maintained
for employees of Borrower. In addition, each
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of the plans maintained for the employees of Borrower are in compliance with the
requirements of ERISA, including the minimum funding requirements.
ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES
8.1 EVENTS OF DEFAULT. "Event of Default," wherever used herein,
means any one of the following events (whatever the reason for the Event of
Default, whether it shall relate to one or more of the parties hereto, and
whether it shall be voluntary or involuntary or be pursuant to or affected by
operation of Applicable Law):
(a) If Borrower fails to timely pay the principal of or any
installment of interest on the Note, whether as scheduled, by acceleration, or
otherwise, after five Business Days' written notice from U. S. Bank; or
(b) If any Indebtedness of Borrower for money borrowed or credit
extended in excess of $250,000 becomes or is declared due and payable (after any
applicable grace period) prior to the stated maturity thereof or is not paid as
and when it becomes due and payable, or if any event occurs which constitutes an
event of default under any instrument, agreement, or evidence of Indebtedness
relating to any such obligation of Borrower; or
(c) If Borrower fails to pay or perform (after any applicable grace
period) any obligation or Indebtedness to others in excess of $250,000 (other
than as set forth in SECTION 8.1(b) herein), whether now or hereafter incurred;
or
(d) If any representation or warranty is false or misleading in any
material respect; or
(e) If Borrower fails to observe or perform any term, covenant, or
agreement to be performed or observed pursuant to ARTICLE V and VI herein and
Borrower fails to cure the same within the following-described cure periods:
(i) No cure period: SECTIONS 6.15, 6.16, 6.17, and 6.18;
(ii) Within ten days after written notice from U. S. Bank:
SECTIONS 5.1 and 5.10;
(iii) Within 20 days after written notice from U. S. Bank:
SECTIONS 5.5, 5.7, 5.11, 5.13, 5.14, 5.15, 5.16, 6.1, 6.2, 6.3, 6.4, 6.6,
6.7, 6.8, 6.9, 6.10, 6.12, and 6.13;
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(iv) Within 30 days after the occurrence without notice:
SECTIONS 5.2, 5.3, 5.4, 5.6, 5.8, 5.9, 6.5, and 6.14;
(v) Within 30 days after written notice from U. S. Bank:
SECTION 6.11; and
(vi) As specified in such respective section of this
Agreement: SECTION 5.12; or
(f) If Borrower fails to observe or perform (not otherwise specified
in this ARTICLE VIII) any term, covenant, or agreement to be performed or
observed pursuant to the provisions of this Agreement, the other Loan Documents,
or any other agreement incidental hereto and such default is not cured within
30 days, provided that if it is impossible to complete a cure within 30 days,
Borrower shall have 90 days to complete a cure so long as Borrower commences the
process to cure within 30 days and diligently pursues a cure to completion; or
(g) If Borrower or any Person other than U. S. Bank fails to perform
any of its obligations under any of the Loan Documents not otherwise specified
in this ARTICLE VIII, or if the validity of any of such documents has been
disaffirmed by or on behalf of any of the parties thereto other than U. S. Bank
and such default is not cured within 30 days, provided that if it is impossible
to complete a cure within 30 days, Borrower shall have 90 days to complete a
cure so long as Borrower commences the process to cure within 30 days and
diligently pursues a cure to completion; or
(h) If custody or control of any substantial part of the Consolidated
property of Borrower is assumed by any Governmental Body or if any Governmental
Body takes any final action, the effect of which is to have a material adverse
effect on Borrower or the Computel Companies; or
(i) If Borrower or the Computel Companies as a whole suspends or
discontinues its business, or the Computel Companies as a whole or any of the
Computel Companies makes an assignment for the benefit of creditors or a
composition with creditors, is unable or admits in writing its inability to pay
its debts as they mature, files a petition in bankruptcy, becomes insolvent
(howsoever such insolvency may be evidenced), is adjudicated insolvent or
bankrupt, petitions or applies to any tribunal for the appointment of any
receiver, liquidator, or trustee of or for it or any substantial part of its
property or assets, commences any proceeding relating to it under any Applicable
Law of any jurisdiction whether now or hereafter in effect relating to
bankruptcy, reorganization, arrangement, readjustment of debt, receivership,
dissolution, or liquidation; or if there is commenced against Borrower or the
Computel Companies as a whole or any of the Computel Companies any such
proceeding that remains undismissed for a period of 90 days or more, or an
order, judgment, or decree
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approving the petition in any such proceeding is entered; or if Borrower or the
Computel Companies as a whole or any of the Computel Companies by any act or
failure to act consents to, approves of, or acquiescences in, any such
proceeding or any appointment of any receiver, liquidator, or trustee of or for
it or for any substantial part of its property or assets, suffers any such
appointment to continue undischarged or unstayed for a period of 90 days or
more, or takes any corporate action for the purpose of effecting any of the
foregoing; or if any court of competent jurisdiction assumes jurisdiction with
respect to any such proceeding, or if a receiver or a trustee or other officer
or representative of a court or of creditors, or if any Governmental Body, under
color of legal authority, takes and holds possession of any substantial part of
the property or assets of Borrower or any of the Computel Companies as a whole;
or
(j) If there is any refusal or failure by any Governmental Body to
issue, renew, or extend any lease or Governmental Approval with respect to the
operation of the business of Borrower, or any denial, forfeiture or revocation
by any Governmental Body of any Governmental Approval that has a material
adverse effect on Borrower; or
(k) Except for the acquisition by CAC of the joint venture interests
of Borrower from WIL, Incorporated, if joint venture interests aggregating 10
percent or more of the outstanding joint venture interest of Borrower are sold,
transferred, assigned, or issued during the terms of the Loan, provided that it
shall not constitute an Event of Default if joint venture interests of Borrower
aggregating 10 percent or more are transferred pursuant to the buy/sell
provisions of the joint venture agreement of Borrower in affect as of the date
of this Agreement; or
(l) If any event or change occurs that has a demonstrable material
adverse effect on the business or financial condition of Borrower, which event
or change will, if not cured, result in a future violation of one or more of the
financial covenants set forth in SECTIONS 6.15 through 6.18 herein, and such
default is not cured within 20 days.
8.2 ACCELERATION; REMEDIES. Upon the occurrence of any Event of
Default or at any time thereafter, if any Event of Default is then continuing,
U. S. Bank may, by written notice to Borrower, declare the entire unpaid
principal balance or any portion of the principal balance of the Note and
interest accrued thereon to be immediately due and payable by the maker thereof;
and such principal and interest shall thereupon become and be immediately due
and payable, without presentation, demand, protest, notice of protest, or other
notice of dishonor of any kind, all of which are hereby expressly waived by
Borrower. U. S. Bank may proceed to protect and enforce its rights hereunder or
realize on any or all security granted pursuant hereto in any manner or order it
deems expedient without regard to any equitable principles of marshaling or
otherwise. All rights and remedies given by this Agreement, the Note, and the
other Loan Documents are cumulative and not exclusive of any thereof or of any
other rights or remedies available to U. S. Bank; no course of dealing
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<PAGE>
between Borrower and U. S. Bank or any delay or omission in exercising any right
or remedy; shall operate as a waiver of any right or remedy; and every right and
remedy may be exercised from time to time and as often as deemed appropriate by
U. S. Bank.
ARTICLE IX. MISCELLANEOUS
9.1 NOTICES. All notices, requests, consents, demands, approvals,
and other communications hereunder shall be deemed to have been duly given,
made, or served if made in writing and delivered personally, sent via facsimile,
or sent via overnight courier, to the respective parties to this Agreement as
follows:
(a) If to Borrower:
PACER/CATS/CCS
Seventh Floor
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: Peter B. Knepper and Ned S. Goldstein
Facsimile No.: (213) 381-6043
(b) If to U. S. Bank:
U. S. Bank of Washington,
National Association
10800 N.E. 8th Street, Suite 1000
Bellevue, Washington 98004
Attention: Ms. Ann B. Caldwell
Facsimile No.: (206) 450-5989
The designation of the persons to be so notified or the address of such persons
for the purposes of such notice may be changed from time to time by similar
notice in writing, except that any communication with respect to a change of
address shall be deemed to be given or made when received by the party to whom
such communication was sent.
9.2 PAYMENT OF EXPENSES.
(a) Whether or not the transactions hereby contemplated are
consummated, Borrower shall pay on demand all costs and expenses of U. S. Bank
incurred in connection with the preparation, negotiation, execution, and
delivery of the Loan Documents, as well as any amendments, modifications,
consents, or waivers relating thereto, including, without limitation, attorney
fees. In addition, if there shall occur any Default or Event of Default,
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U. S. Bank shall be entitled to recover any costs and expenses incurred in
connection with the preservation of rights under, and enforcement of, the Loan
Documents, whether or not any lawsuit or arbitration proceeding is commenced, in
all such cases, including, without limitation, reasonable attorney fees and
costs (including the allocated fees of internal counsel). Costs and expenses as
referred to above, shall include, without limitation, a reasonable hourly rate
for collection personnel, whether employed in-house or otherwise, overhead costs
as reasonably allocated to the collection effort, and all other expenses
actually incurred. Reasonable attorney fees shall include, without limitation,
attorney fees and costs incurred in connection with any bankruptcy case or other
insolvency proceeding commenced by or against Borrower or any Person granting a
security interest in any item of Collateral, including all fees incurred in
connection with (a) moving from relief from the automatic stay, to convert or
dismiss the case or proceeding, or to appoint a trustee or examiner, or
(b) proposing or opposing confirmation of a plan of reorganization or
liquidation, in any case without regarding to the identity of the prevailing
party.
(b) In the event of litigation or arbitration arising out of or
related to this Agreement, the prevailing party shall be entitled to recover
against the nonprevailing party all costs and reasonable attorney fees incurred
by the prevailing party in connection with the dispute giving rise to the
litigation or arbitration. The court or arbitrator (as the case may be) shall
determine which is the prevailing party.
9.3 SETOFF. Borrower hereby pledges and gives to U. S. Bank, a lien
and security interest for the amount of all past, present, and future
Indebtedness of Borrower to U. S. Bank in the balance of any deposit account
maintained by Borrower at U. S. Bank other than in Client Accounts. In the case
of Borrower's Default hereunder, Borrower hereby authorizes U. S. Bank at
U. S. Bank's sole option, at any time and from time to time, to apply to the
payment of all or any portion of the Loan or other Indebtedness of Borrower to
U. S. Bank, any deposit balance or balances now or hereafter in the possession
of U. S. Bank that belong to or are owed to Borrower other than Client Accounts.
9.4 FEES AND COMMISSIONS. Borrower agrees to indemnify U. S. Bank
and hold it harmless with regard to any commissions, fees, judgments, or
expenses of any nature and kind that U. S. Bank may become liable to pay by
reason of any claims by or on behalf of brokers, finders, or agents in
connection with any act or failure to act by Borrower in connection with the
Loan or any litigation or similar proceeding arising from such claims. Borrower
states that it is aware of no valid basis for any such claims.
9.5 NO WAIVER. No failure or delay on the part of U. S. Bank, the
holder of the Note, or Borrower in exercising any right, power, or privilege
hereunder and no course of dealing between Borrower and U. S. Bank or the holder
of the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power, or privilege hereunder preclude any other or
further exercise thereof or the exercise of any right, power, or privilege.
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The rights and remedies herein expressly provided are cumulative and not
exclusive of any rights or remedies that U. S. Bank, any subsequent holder of
the Note, or Borrower would otherwise have. No notice to or demand on
U. S. Bank or Borrower in any case shall entitle U. S. Bank or Borrower to any
other or further notice or demand in similar or other circumstances or shall
constitute a waiver of the right of U. S. Bank to any other or further action in
any circumstances without notice or demand.
9.6 ENTIRE AGREEMENT AND AMENDMENTS. This Agreement represents the
entire agreement between the parties hereto with respect to the Loan and the
transactions contemplated hereunder and, except as expressly provided herein,
shall not be affected by reference to any other documents. This Agreement, or
any provision hereof, may not be changed, waived, discharged, or terminated
orally, but only by an instrument in writing, signed by the party against whom
enforcement of the change, waiver, discharge, or termination is sought.
9.7 BENEFIT OF AGREEMENT. This Agreement is binding upon and inures
to the benefit of Borrower and U. S. Bank and their successors and assigns and
all subsequent holders of the Note or any portion thereof. Borrower is
precluded from assigning any of its respective rights or delegating any of its
obligations hereunder or under any of the other agreements between Borrower and
U. S. Bank without the prior written consent of U. S. Bank.
9.8 SEVERABILITY. If any provision of this Agreement or any of the
Loan Documents is held invalid under any Applicable Laws, such invalidity shall
not affect any other provision of this Agreement that can be given an effect
without the invalid provision, and, to this end, the provisions hereof are
severable.
9.9 DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and do not affect
the meaning or construction of any of the provisions hereof.
9.10 GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder and under the other Loan Documents shall be construed in
accordance with and shall be governed by the laws of the state of Washington
without regard to the choice of law rules thereof.
9.11 CONSENT TO JURISDICTION, SERVICE, AND VENUE. For the purpose of
enforcing payment of the Note, performance of the obligations under the Note,
any arbitration award under the other Loan Documents, or otherwise in connection
herewith, Borrower hereby consents to the jurisdiction and venue of the courts
of the state of Washington or of any federal court located in such state
including but not limited to the Superior Court of Washington for King County
and the United States District Court for the Western District of Washington.
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Borrower hereby waives the right to contest the jurisdiction and venue of courts
located in King County, Washington, on the ground of inconvenience or otherwise
and waives any right to bring any action or proceeding against U. S. Bank in any
court outside King County, Washington. The provisions of this section do not
limit or otherwise affect the right of U. S. Bank to institute and conduct
action in any other appropriate manner, jurisdiction, or court.
9.12 ARBITRATION.
(a) Either Borrower or U. S. Bank may require that all disputes,
claims, counterclaims, and defenses, including those based on or arising from
any alleged tort ("Claims") relating in any way to the Loan be settled by
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and Title 9 of the U.S. Code. All Claims will
be subject to the statutes of limitations that would be applicable if they were
litigated.
(b) This provision is void if the Loan, at the time of the proposed
submission to arbitration, are secured by real property located outside of
Oregon or Washington or if the effect of the arbitration procedure (as opposed
to any Claims of Borrower) would be to materially impair U. S. Bank's ability to
realize on any Collateral pursuant to an arbitration ruling favorable to
U. S. Bank.
(c) If arbitration occurs and each party's Claim is less than
$100,000, one neutral arbitrator will decide all issues; if either party's Claim
is more than $100,000, three neutral arbitrators will decide all issues. All
arbitrators will be active Washington State Bar members in good standing. All
arbitration hearings will be held in Seattle, Washington. In addition to all
other powers, the arbitrator or arbitrators shall have the exclusive right to
determine all issues of arbitrability and shall have the authority to issue
subpoenas. Judgment on any arbitration award may be entered in any court with
jurisdiction.
(d) If either party institutes any judicial proceeding relating to
the Loan, that action shall not be a waiver of the right to submit any Claim to
arbitration; provided, that the party wishing to submit to arbitration any claim
forming the subject matter of any such judicial proceeding must commence an
arbitration in accordance with the provisions of this SECTION 9.12 within
60 days of service of the summons and complaint in said judicial proceeding. In
addition, each has the right before, during, and after any arbitration to
exercise any number of the following remedies, in any order or concurrently:
(i) setoff, (ii) self-help repossession, (iii) judicial or nonjudicial
foreclosure against real or personal collateral, (iv) provisional remedies,
including injunction, appointment of a receiver, attachment, claim and delivery,
and replevin; provided, however, nothing in this provision shall be construed to
restrict the ability to assert any mandatory counterclaim in any judicial
proceeding commenced pursuant to this provision or as a waiver of any such
counterclaim.
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<PAGE>
(e) This arbitration clause cannot be modified or waived by either
party except in writing, which writing must refer to this arbitration clause and
be signed by Borrower and U. S. Bank.
9.13 COUNTERPARTS. This Agreement and each of the Loan Documents may
be executed in one or more counterparts, each of which shall constitute an
original agreement, but all of which together shall constitute one and the same
instrument.
9.14 STATUTORY NOTICE. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, Borrower and U. S. Bank have caused this Agreement
to be duly executed by the respective, duly authorized signatories as of the
date first above written.
PACER/CATS/CCS
By: Ticketmaster Cinema Group,
Ltd., managing joint venture partner
By
-------------------------------
Title
----------------------------
U. S. BANK OF WASHINGTON,
NATIONAL ASSOCIATION
By
-------------------------------
Title
----------------------------
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EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated as of December 15, 1993, between Ticketmaster Holdings
Group, Ltd., an Illinois corporation (the "Company"), and Fredric D. Rosen
("Executive").
WITNESSETH:
-----------
WHEREAS, the Company is desirous of employing Executive, and Executive is
desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $1,800,000 annually during each
of the first three Contract Years, $2,100,000 during the fourth Contract
Year and $2,300,000 during the fifth Contract Year.
(b) "BENEFIT PLAN" shall mean each vacation pay, sick pay,
retirement, welfare, medical, dental, disability, life insurance or other
employee benefit plan, program or arrangement. In addition, at the sole
discretion of the Board benefit plan may also include one or more of the
following: incentive compensation, bonus, stock option and restricted
stock plan, program or arrangement.
(c) "BOARD OF DIRECTORS" shall mean the board of directors of the
Company.
(d) "CAUSE" shall mean (i) the conviction of Executive of a felony
which can reasonably be expected to have a material adverse impact on the
Company's business or reputation or (ii) the commission by Executive of an
act of fraud or embezzlement involving assets of the Company or its
customers, suppliers or affiliates. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to Executive (i) a copy of a
resolution, duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board of Directors at a meeting of
the Board of Directors called and held for the purpose of determining
whether Cause exists (after reasonable notice to Executive and opportunity
for him, together with his counsel, to be heard before the Board of
Directors), finding that, in the good faith opinion of the Board of
Directors, Executive was guilty of the conduct set forth in this Section
1(d) and
<PAGE>
specifying the particulars thereof in detail, (ii) an affidavit sworn to
by the Secretary of the Company stating that such resolution was in fact
adopted by the affirmative vote of not less than a majority of the entire
membership of the Board and Directors and (iii) a report with respect to
such conduct from a firm of independent attorneys selected by a majority
of the entire membership of the Board of Directors to the effect that the
conduct of Executive has been such as to permit the Board of Directors to
terminate Executive's employment for Cause within the meaning of the
provisions of this Section 1(d).
(e) "CHAIRMAN OF THE BOARD" shall mean the Chairman of the Board of
Directors of the Company, as determined from time to time by the Board of
Directors, but initially, upon his election to such office, being Paul
Allen.
(f) "CHANGE IN CONTROL" shall mean (i) a change in the majority
membership of the Board of Directors in connection with or resulting from a
merger, consolidation, sale of assets or similar transaction involving the
Company or a tender offer or exchange offer involving the Common Stock,
(ii) the sale of all or substantially all of the Company's assets,
(iii) the dissolution or liquidation of the Company or (iv) a reduction in
the ownership interest of Paul Allen in the outstanding Common Stock to
below 51%. Notwithstanding the generality of the foregoing, a "Change in
Control" shall not be deemed to have taken place upon the occurrence of an
Initial Public Offering so long as Paul Allen continues to own at least 51%
of the outstanding Common Stock upon consummation of such Initial Public
Offering.
(g) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(h) "COMMON STOCK" shall mean the Class A Common Stock, no par value,
and the Class B Common Stock, no par value, of the Company and upon
reclassification thereof, such class or classes having general voting
power, under ordinary circumstances, in the absence of contingencies, to
elect the directors of the Company.
(i) "CONTRACT YEAR" shall mean each year during the term hereof
commencing on February 1 and ending on the immediately following January
31.
(j) "COUNSEL" shall mean tax counsel selected by the Company and
approved by Executive.
(k) "DATE OF TERMINATION" shall mean (A) if termination of employment
occurs by reason of death, the date of
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Executive's death or (B) if termination of employment occurs for any other
reason, the date on which a Notice of Termination is delivered to the other
party; provided, however, that if, within 60 days after any Notice of
Termination, is given, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination
of employment, then the Date of Termination shall be the date of the Notice
unless such dispute is otherwise determined by mutual agreement or court
order in favor of Executive, in which case the Date of Termination shall be
the date on which the dispute is finally determined, either by mutual
written agreement of the parties or by a final judgment, order or decree of
a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
(1) "EBITDA" shall mean the Company's consolidated earnings before
interest, taxes, depreciation and amortization, as determined in accordance
with generally accepted accounting principles, consistently applied. For
these purposes, EBITDA, during any base year or years as well as the bonus
commutation year, shall be reduced by amortization of non-recoupable
signing bonuses to venues or arenas in excess of $100,000. EBITDA shall
include earnings from new activities of the Company or acquired businesses,
but in such case shall be reduced by, but in no event less than zero, an
amount equal to the actual interest on additional debt incurred to enter
into such activities or an imputed return on new invested equity by Paul
Allen and other current stockholders or their designees at an amount equal
to the Wells Fargo Bank prime rate ("New Investment Cost"). In the event
that current year's earnings from any such new activity or business shall
be less than the New Investment Cost for such year, such excess New
Investment Cost shall be carried over and shall be applied to reduce
future years' earnings from such new activity for purposes of this bonus
formula.
(m) "EXCISE TAX" shall mean the tax imposed pursuant to section 4999
of the Code or any other amended or successor provision.
(n) "GOOD REASON" shall mean (i) as to Executive (A) a diminution in
Executive's titles, responsibilities and/or duties, (B) a change in the
person or persons to whom Executive reports, except as provided in Section
4(a), (C) a reassignment of Executive to a location which increases
Executive's commute from his existing home by more than 35 miles on a daily
round trip basis, (D) an assignment of Executive to a location other than
the principal executive office of the Company, (E) the Company's failure to
continue or a substantial change in Executive's participation in any
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Benefit Plans (subject to the Boards right to amend, modify or terminate
such plans), (F) the Company's failure to obtain the agreement of any
successor of the Company to assume this Agreement and (G) any material
breach of this Agreement by the Company which is either not capable of
correction or which in fact is not corrected within (10) ten days after
written notice by Executive specifying such breach; and (ii) as to the
Company (A) prior to consummation of an Initial Public Offering, the good
faith determination by the Chairman of the Board that Executive has failed
to perform his duties as directed and (B) subsequent to consummation of an
Initial Public Offering, the good faith determination by a majority of the
entire membership of the Board of Directors that Executive has failed to
perform his duties as directed.
(o) "GROSS-UP PAYMENT" shall mean, with respect to any Severance
Payment that is subject to Excise Tax, an amount that, after reduction of
the amount of such Gross-Up payment for all federal, state and local tax to
which the Gross-Up Payment is subject (including the Excise Tax to which
the Gross-Up Payment is subject), is equal to the amount of the Excise Tax
to which such Severance Payment is subject. For purposes of determining
the amount of any Gross-Up Payment, Executive shall be deemed to pay
federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation
in the state and locality of residence of Executive on the Date of
Termination, net of the maximum reduction on federal income taxes which
could be obtained from deduction of such state and local taxes.
(p) "INITIAL PERIOD" shall mean that portion of the term hereof from
the date through January 31, 1994.
(q) "INITIAL PUBLIC OFFERING" shall mean the first offering of the
Common Stock to the public for cash pursuant to an effective registration
statement under the Securities Act of 1933, as amended, or any similar
federal statute then in force; provided, however, that a registered
offering made in connection with an employee benefit plan shall not
constitute an Initial Public Offering.
(r) "NOTICE OF TERMINATION" shall mean a written notice which shall
indicate the specific provision in this Agreement relied upon in connection
with a termination of employment and which shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination under the provision so indicated.
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(s) "PERFORMANCE BONUS" shall have the meaning ascribed to that term
in Section 6(b).
(t) "SEVERANCE PAYMENTS" shall mean any severance payments made or to
be made to Executive pursuant to any provision of Section 7 below (other
than pursuant to Section 7(g) of this Agreement.)
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for
the Initial Period and thereafter for a period of five years, the term hereof
therefore commencing on the date hereof and ending on January 31, 1999, subject
to earlier termination as herein provided. During the Initial Period Executive
shall be employed by Company upon the same terms, compensation and benefits as
provided hereunder, pro-rated to cover such period. During the 90-day period
immediately following the end of the fourth Contract Year, the Company and
Executive shall negotiate, in good faith, the terms and conditions of a three
year extension to this Agreement upon terms and conditions no less favorable to
Executive than the terms and conditions applicable during the fifth Contract
Year; provided, however, that the foregoing obligation to negotiate in good
faith shall not apply in the event that either the Company or Executive gives
written notice to the other during such 90-day period of its or his desire to
have this Agreement terminate at the end of the initial five year term. In no
event shall this Agreement be extended beyond the initial five-year term without
the agreement of Company and Executive.
4. POSITION AND DUTIES.
(a) Executive shall serve as the President and Chief Executive
Officer of the Company, reporting only to the Chairman of the Board prior to
consummation of the Initial Public Offering and to the Board of Directors
subsequent to consummation of the Initial Public Offering. Subject to the
authority of the Board of Directors, Executive shall have supervision and
control over, and responsibility for, the general management and operation of
the Company consistent with Executive's former duties in such position and shall
have such other powers and duties as may from time to time be prescribed by the
Board of Directors, provided that such duties are reasonable and customary for a
president and chief executive officer. Other than the Chairman of the Board, so
long as it is Paul Allen, no executive or other employee of the Company shall
hold a position, stature, title or powers higher or greater than or equal to
those of Executive. Executive shall devote his entire working time, attention
and energies to the business of the Company.
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<PAGE>
(b) Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from (i) serving the boards of directors of a reasonable
number of other corporations with the consent of Paul Allen, which consent will
not be unreasonably withheld, or the boards of a reasonable number of trade
associations and/or charitable organizations (ii) engaging in charitable
activities and community affairs, and (iii) managing his personal investments
and affairs, provided that such activities do not materially interfere with the
proper performance of his duties and responsibilities as the Company's President
and Chief Executive Officer.
(c) Concurrently with the execution of this Agreement, Executive is
being elected as a member of the Board of Directors. Executive shall serve on
the Board of Directors during the entire term hereof. If, at any time during
the term of his employment, the shareholders of the Company shall fail to elect
Executive to the Board of Directors, or the Board of Directors shall fail to
elect Executive to the offices of President and Chief Executive Officer of the
Company, or shall remove him from either of such offices, other than as provided
for in this Agreement, Executive shall have the right to terminate his services
hereunder for Good Reason pursuant to Section 7(d) and Executive shall have no
further Obligation under this Agreement.
(d) Executive agrees to serve without additional compensation, if
elected or appointed thereto, in one or more offices or as a director of any of
the Company's subsidiaries; provided, however, that Executive shall not be
required to serve as an officer or director of any such subsidiary if such
service would expose him to potential adverse financial consequences.
5. PLACE OF PERFORMANCE.
In connection with his employment by the Company, Executive shall be
based at the Company's principal executive offices located in Los Angeles,
California. In the event that Executive consents to any relocation requested by
the Company, the Company will promptly pay or reimburse Executive for all
reasonable moving expenses incurred by Executive relating to a change of his
principal residence and will indemnify Executive in connection with the sale of
his principal residence. Such indemnification shall be computed as the
difference (if such difference is a positive number) between (i) the higher of
(A) Executive's aggregate investment in such residence or (B) the fair market
value of such residence as determined by a real estate appraiser chosen by
Executive and reasonably satisfactory to the Company and (ii) the actual sale
price of such residence minus the expenses of the sale (including broker's
commissions).
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6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Company shall
compensate Executive for the Initial Period as provided herein in Section 3
hereof. The Base Salary Amount shall be paid to Executive in accordance with
the Company's regular payroll practices with respect to senior management
compensation.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive an annual performance bonus (the "Performance
Bonus") in an amount equal to (1) fifteen percent (15%) of the excess, if any,
of the EBITDA for the fiscal year ended January 31, 1995, over the EBITDA for
the fiscal year ended January 31, 1994; (2) twelve and one-half percent (12
1/2%) of the excess, if any, of the EBITDA for the fiscal year ended January 31,
1996 over the average EBITDA for the fiscal years ended January 31, 1994 and
1995; and (3) for each succeeding year during the term hereof, including the
fiscal years ended January 31, 1997, 1998 and 1999, ten percent (10%) of the
excess, if any, of the EBITDA for such year over the average EBITDA for the
prior 3 fiscal years. Notwithstanding the foregoing, in the event that EBITDA
does not increase by at least 12.5% during the fiscal year of the Company
ending during the first Contract Year, 14% during the fiscal year of the
Company ending during the second Contract Year or 15% during the fiscal year of
the Company ending during the third, fourth or fifth Contract Year, the
Performance Bonus pertaining to that Contract Year shall not exceed 50% of the
Base Salary Amount for such Contract Year. Attached hereto as Exhibit A is an
illustration of the calculation of the Performance Bonus. In the event that
the Company changes its fiscal year, the computation and payment of the
Performance Bonus shall be prorated and adjusted on an allocable and equitable
basis to reflect such change including payment of a Performance Bonus for any
short fiscal year. An advance Performance Bonus in an amount equal to 75% of
the total estimated bonus for each Contract Year shall be paid by the Company
to Executive in a lump sum no later than sixty (60) days after the end of the
relevant fiscal year of the Company based upon Company prepared financial
statements. The balance of the Performance Bonus for such year shall be paid no
later than one hundred and five (105) days after the end of such fiscal year.
The Company shall also pay to Executive, such discretionary bonuses as may be
granted by the Board of Directors, in its discretion.
(c) EXPENSES. Executive shall be entitled to receive (i) prompt
reimbursement for all documented business expenses incurred by him in the
performance of his duties hereunder, provided that Executive properly accounts
therefor in accordance with the Company's reimbursement policy and practices of
the Company
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as of the date hereof, and (ii) a nonaccountable business expense allowance of
$25,000 during each Contract Year.
(d) FRINGE BENEFITS. Executive shall be entitled to participate in
and receive benefits under all of the Company's Benefit Plans or programs
generally available to senior management of the Company, including, but not
limited to any retirement, stock option plans, disability insurance plans and
all other plans or programs. Nothing paid to Executive under any Benefit Plan
presently in effect or made available in the future shall be deemed to be in
lieu of compensation payable to Executive hereunder. Further the Company
reserves the right to amend, modify or terminate any and all such plans.
(e) MEDICAL BENEFITS. To the extent not covered by the Benefit Plans
pursuant to Section 6(d), Executive shall be entitled to prompt reimbursement
from the Company for all reasonable medical, dental, hospitalization,
convalescent, nursing and similar health expenses incurred by Executive for his
benefit or for the benefit of his dependents. The Company may, in its
discretion, insure such benefits; provided, however, that such benefits shall
not be affected by the existence or non-existence of any insurance and shall not
be limited by the terms of any such insurance.
(f) LIFE INSURANCE. So long as Executive is insurable, the Company
agrees to maintain in effect during the term hereof insurance on Executive's
life payable to his estate or his named beneficiary or beneficiaries in the
amount of $10,000,000. The ownership of such Insurance Policies may, at the
sole discretion of the Executive, be transferred to a Trust for the benefit of
his spouse or family.
(g) STOCK OPTIONS. Concurrently with the execution of this
Agreement, the Company is granting to Executive stock options to purchase
3,994,019 shares of the Class A Common Stock of the Company, such shares covered
by such option being equal to 8% of the outstanding Common Stock, as of the date
hereof on a fully diluted basis. The stock options will be in the form attached
hereto as Exhibit B. The Company agrees to lend Executive any and all amounts
that may be required by Executive to pay the exercise price of the stock options
and the federal and state income taxes payable with respect to any such
exercise, such loans to bear interest at the lowest rate necessary in order for
there to be no interest imputed under the Code.
(h) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave and
holiday policy for senior management and up to six (6) weeks paid vacation
during each Contract Year as Executive deems reasonable. Any vacation time that
is not taken in a given Contract Year shall be carried forward to the following
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Contract Year or Contract Years, as the case may be but in no event more than
two (2) weeks, on a cumulative basis. The Executive shall not receive
additional compensation for vacation time not taken.
(i) PERQUISITES. Executive shall be entitled to receive the
following perquisites: (i) consistent with past Company practice, the
Company shall furnish Executive with the use of an automobile comparable in
luxury to a Cadillac, Mercedes or BMW and shall pay or reimburse Executive for
all expenses pertaining to the ownership and operation of such automobile; (ii)
the Company shall pay or reimburse Executive for all membership fees, dues and
other expenses in connection with Executive's membership with a country club of
his choice; and (iii) the Company shall pay the reasonable expenses of
Executive's investment advisor and tax advisor, and all related expenses
pertaining to financial planning and tax return preparation.
7. TERMINATION OF SERVICE.
(a) TERMINATION UPON DEATH. Executive's employment hereunder shall
terminate upon his death, in which event the Company shall pay to such person as
the Executive shall have designated in a written notice filed with the Company
or, if no such person shall have been designated, to his estate as a lump sum
death benefit an amount equal to the Base Salary Amount for the one-year period
immediately following the Date of Termination plus an amount equal to
Performance Bonuses accrued through the Date of Termination and all Base Salary
Amounts, amounts due under Benefit Plans and perquisites through the Date of
Termination.
(b) TERMINATION UPON DISABILITY. If, as a result of a permanent
mental or physical disability, Executive shall have been absent from his duties
hereunder on a full-time basis for six (6) consecutive months, ("Disability")
and, within 30 days after the Company notifies Executive in writing that it
intends to replace him, (which notice can be given at the end of the 5th month
during such six month period), Executive shall not have returned to the
performance of his duties on a full-time basis, the Company shall be entitled to
terminate Executive's employment. In addition, Executive shall, upon his
Disability, have the right to terminate his employment with the Company. If
such employment is terminated (whether by the Company or by Executive) as a
result of Executive's Disability, the following shall apply:
(i) the Company shall continue to pay Executive the Base Salary
Amount to which he would otherwise be entitled during the two-year period
immediately following the Date of Termination (offset by any disability
insurance payments received by Executive on policies provided by the
Company);
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<PAGE>
(ii) the Company shall pay Executive an amount equal to
Performance Bonuses accrued through the Date of Termination;
(iii) the Company shall maintain in full force and effect, for
the continued benefit of Executive during the two-year period immediately
following the Date of Termination, all Benefit Plans in which Executive was
entitled to participate immediately prior to the Date of Termination to the
extent that Executive's continued participation is possible under the
general terms and conditions of such Benefit Plans. In the event that the
Executive's participation in any such Benefit Plan is barred as a result of
his disability, Executive shall be entitled to receive an amount equal to
the annual contributions, payments, credits or allocations which would have
been made by the Company to him, to his account or on his behalf under such
Benefit Plan from which his continued participation is barred;
(iv) the Company shall maintain in full force and effect, for
the continued benefit of Executive's estate or dependents during the two-
year period immediately following the Date of Termination, any life,
accident, disability or health and dental insurance plans, vision care plans
and any other similar welfare plans of the Company in effect immediately
prior to the Date of Termination, or the Company shall provide equivalent
benefits at no cost to Executive's estate or his dependents;
(v) The Company shall continue to purchase life insurance on
Executive's life pursuant to Section 6(f) during the two-year period
immediately following the Date of Termination, and any such insurance
proceeds shall, upon Executive's death, be applied in the manner provided
in said Section 6(f).
(c) TERMINATION FOR CAUSE. The Company shall be entitled to
terminate Executive's employment for Cause, in which event Executive shall be
entitled to all Base Salary Amounts, amounts under Benefit Plans and perquisites
through the Date of Termination plus an amount equal to Performance Bonuses
accrued through Date of Termination.
(d) TERMINATION FOR GOOD REASON. Executive shall be entitled to
terminate Executive's employment for Good Reason at any time and the Company
shall be entitled to terminate Executive's Employment for Good Reason at any
time after the end of the first Contract Year. Upon the termination of
Executive's employment by Company for Good Reason after completion of the first
Contract Year, Executive shall be entitled to receive from the Company a lump
sum payment in an amount equal to his Base Salary Amount and
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<PAGE>
amounts under Benefit Plans for the two-year period immediately following the
Date of Termination plus an amount equal to Performance Bonuses accrued through
the Date of Termination and all Base Salary Amounts, amounts under the Benefit
Plans and perquisites through the Date of Termination, all of which shall be
payable by Company within ten (10) days after termination. Upon the termination
of Executive's employment by Executive for Good Reason all of the aforesaid
compensation, bonuses and benefits shall be paid to Executive by the Company
over the two year period following the date of termination. In such event,
Executive's 2% stock ownership shall be purchased by the Company pursuant to
Section 9(a).
(e) NOTICE OF TERMINATION. Any termination of Executive's employment
by the Company or Executive pursuant to Sections 7(b), 7(c), or 7(d) shall be
communicated by a Notice of Termination to the other party.
(f) NO MITIGATION. Executive shall not be required to mitigate the
amount of any payment provided for in this Section 7 by seeking other employment
or otherwise, nor will the amount of damages or severance benefits payable to
Executive under this Section 7 be reduced by reason of his securing other
employment or for any reason.
(g) GROSS-UP PAYMENTS. In the event that this Agreement and the
payments contemplated herein have not been approved by at least a 75% vote of
the Shareholders and will be subject to the Excise Tax, the Company shall, in
addition to making such Severance Payment, pay the Gross-Up Payment to
Executive.
(i) For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax (A) all Severance Payments (1)
shall be conclusively presumed to be payments described in section
280G(b)(2)(A)(i) of the Code, except that, in the case of a Severance
Payment that is not precipitated (x) by a Change in Control, (y) by a
change in the ownership of a substantial portion of the assets of the
Company, or (z) by a termination of employment where a Change in Control or
change in the ownership of a substantial portion of the assets of the
Company occurs within one (1) year after the date hereof, such a Severance
Payment, upon receipt of a favorable written opinion, satisfactory to
Executive, of Counsel, shall be (i) presumed conclusively to not be a
payment described in section 280G(b)(2)(A) of the Code, and (2) shall be
conclusively presumed to be reasonable compensation for services rendered
within the meaning of section 280G(b)(4)(B) of the Code; (B) any Other
Benefits shall be conclusively presumed to be payments described in section
280G(b)(2)(A)(i) of the Code except to the extent that a favorable written
opinion, satisfactory to Executive, of
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<PAGE>
Counsel is obtained in which Counsel opines that such Other Benefits are
not described in section 280G(b)(2)(A)(i) of the Code; (C) any Other
Benefits shall be conclusively presumed not to be reasonable compensation
for services rendered within the meaning of section 280G(b)(4)(B) of the
Code unless a contrary written opinion, satisfactory to Executive, of
Counsel is obtained; (D) the present value of the Severance Payments for
purposes of section 280G(b)(2)(A)(ii) of the Code shall be calculated in
accordance with Section 280 G(d)(4) regardless of when paid or received;
(E) the present value of all Other Benefits shall be determined by the
Company's independent auditors in accordance with the principles of sections
280G(d)(3) and 280G(d)(4) of the Code; and (F) unless a contrary written
opinion, satisfactory to Executive, of Counsel is obtained, it shall be
conclusively presumed that none of the exceptions to parachute payment
treatment set forth in sections 280G(b)(4)(A) and 280G(b)(5) of the Code
applies to any of the payments or other benefits described in clauses (A)
or (B) of this Section 7(g)(i).
(ii) If, in accordance with the provisions of Section 7(g)(i),
it is determined that all or part of the Severance Payments will be subject
to the Excise Tax, then the amount of the Severance Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A)
total amount of the Severance Payments or (B) the amount of excess
parachute payments within the meaning of section 280G(b)(1) of the Code
(determined based on the presumptions and assumptions set forth in Section
7(g)(i)).
(iii) In the event that the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of
termination of employment, Executive shall repay to the Company at the time
that the amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal
and state and local income tax imposed on the Gross-Up Payment being repaid
by Executive if such repayment results in the reduction in Excise Tax
and/or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the applicable federal rate (as defined in
section 1274(d) of the Code). In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of
the termination of employment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-
Up payment), the Company shall make an additional gross-up payment to
Executive in respect of such excess (plus any interest payable with respect
to such excess)
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<PAGE>
at the time that the amount of such excess is finally determined.
(iv) Payments required to be made under this Section 7(g) may
either be made directly to Executive or, at the option of the Company, may
be made to the appropriate taxing authority or authorities in satisfaction
of any obligation or obligations imposed on the Company by an applicable
federal, state or local taxing statute or regulation to withhold and pay
any Excise Tax or federal, state or local income tax to which payments made
pursuant to this Section 7 (including this Section 7(g) are subject. Any
amounts paid in satisfaction of such a withholding obligation shall be
deemed to have been paid to Executive for purposes of this Section 7.
8. COVENANT NOT TO COMPETE; CONFIDENTIALITY. Reference is made to the
provisions relative to non-competition and confidentiality attached hereto as
Exhibit C. The Company and Executive shall perform and satisfy their
respective duties and obligations contained in such non-competition and
confidentiality provisions as if set forth in full herein. Upon any
termination of Executive's employment by either party for Good Reason, there
shall be no restrictions on Executive's future employment elsewhere or
non-compete except that Executive shall not actively solicit any of the
Company's employees nor clients for computerized ticketing for a period of 24
months from such termination, and during such 24 month period he will not
interfere with existing customer contracts nor for a period of 60 months
disclose Company confidential information.
9. EXECUTIVE'S STOCK
(a) Executive shall acquire an ownership interest of two (2%) percent
of the total outstanding common stock of the Company (the "Stock") concurrently
with the sale of stock in the Company to Paul Allen or affiliates pursuant to
a certain Subscription and Stock Sale Agreement between the
Company, the Executive and the Rosen Family Foundation of even date. Upon any
termination of Executive's employment hereunder by the Company, the Company
shall be obligated to repurchase the Stock from Executive at a purchase
price per share determined as set forth in Section 2B(b)(ii) of the Shareholders
Agreement of even date herewith annexed hereto as Exhibit D, but in no event
less than the price per share received by Executive for the other shares of
stock sold by Executive at the time of the acquisition by Paul Allen or
affiliates of their interest in the stock of the Company. It is the
understanding of the Parties that in no event shall the purchase price of such
shares be less than $4,330,848 in the aggregate.
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<PAGE>
(b) In the event of Termination of Executive's employment because of
the death or total disability of Executive during the term hereof, Executive or
his estate of personal representative as the case may be, shall sell and the
Company shall purchase the Executive's Stock, at the purchase price specified in
subparagraph (a).
(c) Any purchase of Executive's Stock by the Company provided for
herein in Section 9(a) or 9(b), shall take the place within sixty (60) days
after the termination of Executive's employment hereunder, (except if Company
terminates Executive for Good Reason, in which case ten (10) days shall be
substituted for sixty (60) days) at which time Executive or his estate or
personal representative shall deliver the Stock to the Company, duly endorsed
for transfer and free and clear of all encumbrances, against payment therefor by
the Company in immediately available funds.
(d) For so long as Executive is the owner of the Stock, Executive
shall have the same rights with respect thereto as are set forth in the
Registration and Exchange Right Agreement annexed hereto as Exhibit E and the
Shareholders Agreement annexed hereto as Exhibit D.
(e) In the event of a public offering of equity securities by
Ticketmaster Corporation or another subsidiary of the Company or other entity
which involves any part of the Ticketmaster business, if the Company is not then
public, Executive shall have the right to exchange his shares of the Company
Stock for such number of shares of such entity making a public offering that
represents a value equal to the value of the Company Stock owned by Executive.
10. INDEMNIFICATION. The Company shall indemnify Executive if he is made,
or threatened to be made, a party to an action or proceeding, to the full extent
permitted by applicable law, including an action by or in the right of the
Company to procure a judgment in its favor, by reason of the fact that Employee
is or was an officer, director or employee of the Company, against all costs and
expenses resulting from or related to such action or proceeding, or any appeal
thereof, if Executive acted in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. The termination of any
such action or proceeding by judgment, settlement, conviction or upon a plea of
nolo contendere, or its equivalent, shall not in itself create the presumption
that Executive did not act in good faith for a purpose which he reasonably
believed to be in the best interests of the Company. As used in this Section
10, (i) "costs and expenses" means any and all costs, expenses and liabilities
incurred by Executive, including but not limited to (A) attorney fees, (B)
amounts paid in settlement of, or in the satisfaction of any order
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or judgment in, any action or proceeding and (C) fines, penalties and
assessments asserted or adjudged in any action or proceeding, and (ii) "action
or proceeding" means any and all suits, claims, actions, investigations or
proceedings whether civil, criminal or administrative, heretofore or hereafter
instituted or asserted.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party, except that the Company shall pay or
reimburse Executive for all legal fees and related expenses incurred on behalf
Executive in connection with the negotiation and documentation of this
Agreement.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have been
duly given or made upon receipt) by delivery in person, by overnight courier
service, by cable, by telecopy, by telegram, by telex or by registered or
certified mail to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 11(b)):
(a) If to the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chairman of the Board
Telecopy No.: (213) 382-1146
With a copy to:
William D. Savoy
Vulcan Northwest, Inc.
110 110th Avenue
Suite 550
Bellevue, WA 98005
Telecopy No.: (206) 453-1985
(b) If to Executive:
Fredric D. Rosen
c/o Ticketmaster Corporation
3701 Wilshire Blvd.
Los Angeles, CA 90010
Telecopy No.: (213) 386-1244
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<PAGE>
With a copy to:
Kleban & Samor, P.C.
2425 Post Road
Southport, CT 06490
Attention: Stephen J. Saft, Esq.
Telecopy No.: (203) 259-9617
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
Executive to compensation from the Company in the same amount and on the same
terms as he would be entitled to hereunder if the Company terminated his
employment in the manner contemplated in Section 7(d), except that for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
(ii) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, devisees, legatees,
executors, administrators, successors and personal or legal representatives. If
Executive is domiciled in a community property state or a state that has adopted
the Uniform Marital Property Act or equivalent or if Executive is domiciled in a
state that grants to his spouse any other marital rights in Executive's
assets (including, without limitation, dower rights or a right to elect
against Executive's will or to claim a forced share of Executive's estate),
this Agreement shall also inure to the benefit of, and shall also be binding
upon, his spouse. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's designee or, if there be no terms of this Agreement
to the Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or
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<PAGE>
future laws effective during the term of this Agreement, such provisions shall
be fully severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
(f) ENTIRE AGREEMENT. This Agreement, including all of the Exhibits,
constitutes the entire agreement of the paries hereto with respect to the
subject matter hereof and thereof and supersedes all prior agreements and
understandings both written and oral, between the Company and the Executive with
respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
may not be assigned or assumed by operation of law or otherwise without the
express written consent of the Company and the Executive (which consent may be
granted or withheld in the sole discretion of the Company or the Executive, as
applicable).
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company and
Executive. Either party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of the other party or (b)
waive compliance with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party to be bound thereby.
Any waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other tem or condition, of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable to
contracts executed in and to be performed entirely within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by any party hereto and arising directly or
indirectly out of this Agreement which are brought pursuant to judicial
proceedings shall be litigated in the Superior Court of Los Angeles, California.
The parties
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hereto expressly submit and consent in advance to such jurisdiction and agree
that service of summons and complaint or other process or papers may be made by
registered or certified mail addressed to the relevant party at the address to
which notices are to be sent pursuant to Section 11(b). The parties waive any
claim that the United States District Court for the Southern District of
California or the Superior Court of the State of California is an inconvenient
forum or an improper forum based on lack of venue.
(k) ATTORNEY'S FEES. The Company shall pay or reimburse Executive
for all legal fees and expenses incurred by Executive in enforcing this
Agreement, except that in the event of any termination of Executive for Cause
pursuant to Section 7(c) hereof, if any legal action or other proceeding is
brought for the enforement of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in
that action or proceeding, in addition to any other relief to which it may be
entitled.
(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date and year first written above.
TICKETMASTER HOLDINGS GROUP, LTD.
By: /s/Peter B. Knepper
-------------------------------------
Title: Treasurer and [Illegible]
----------------------------------
/s/Fredric D. Rosen
----------------------------------------
FREDRIC D. ROSEN
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EXHIBIT A
PERFORMANCE BONUS FORMULA EXAMPLE
- --------------------------------------------------------------------------------
EMPLOYMENT BONUS AGREEMENT
(000's omitted)
FYE FYE FYE FYE
1/31/94 1/31/95 1/31/96 1/31/97
------- ------- ------- -------
Base Earnings $34,000 $40,000 $45,000 $55,000
Average of Prev Yr (yrs) 34,000 37,000 39,667
Computation Base 6,000 8,000 15,333
Percentage 15% 12.5% 10%
Bonus 900 1,000 1,533
<PAGE>
EXHIBIT A
PERFORMANCE BONUS FORMULA EXAMPLE
- --------------------------------------------------------------------------------
EMPLOYMENT BONUS AGREEMENT
(000's omitted)
FYE FYE FYE FYE
1/31/94 1/31/95 1/31/96 1/31/97
------- ------- ------- -------
Base Earnings $34,000 $40,000 $45,000 $55,000
Average of Prev Yr (yrs) 34,000 37,000 39,667
Computation Base 6,000 8,000 15,333
Percentage 15% 12.5% 10%
Bonus 900 1,000 1,533
<PAGE>
EXHIBIT C
PROVISIONS RELATIVE TO
NONCOMPETITION AND CONFIDENTIALITY
1. COVENANT NOT TO COMPETE. During Executive's employment by the Company
and for a period of twenty-four (24) months from and after the termination of
Executive's employment with the Company, other than termination by either party
for Good Reason, Executive will not, without the prior written consent of the
Company, directly or indirectly engage in or assist any activity which is the
same as, similar to, or competitive with the Ticketmaster Businesses (other than
on behalf of the Company or any of its subsidiaries or affiliates) including,
without limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder of
less than 5% of the outstanding capital stock of a publicly traded corporation),
guarantor, consultant, advisor, agent, sales representative or other
participant, anywhere in the world that the Company or any of the Ticketmaster
Entities has been engaged, including, without limitation, the United States,
Canada, Mexico, England, Ireland, Scotland, Europe and Australia. Nothing
herein shall limit Executive's ability to own interests in or manage entities
which sell tickets as an incidental part of their primary businesses (e.g. cable
networks, on-line computer services, sports teams, arenas, hotels, cruise lines,
theatrical and movie productions and the like) and which do not hold themselves
out generally as competitors of the Company and its subsidiaries. The
"Ticketmaster Businesses" shall mean the computerized sale of tickets for
sporting, theatrical, cinematic, live theatrical, musical or any other events on
behalf of various venues and promoters through distribution channels currently
being utilized by the Company or any of its subsidiaries or affiliates (as
defined in Rule 405 of Regulation C promulgated under the Securities Act of
1933, as amended).
2. SOLICITATION OF EMPLOYEES. During Executive's employment with the
Company and for a period of twenty-four (24) months from and after the date of
termination of Executive's employment with the Company, Executive shall not (i)
directly or indirectly induce or attempt to induce any person then employed
(whether part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or independent
contractor, to leave the employ of the Company or to cease providing or
otherwise alter the services then provided to the Company or to any of its
subsidiaries or affiliates or (ii) in any other manner seek to engage or employ
any such person (whether or not for compensation) as an officer, employee,
consultant, adviser or independent contractor in connection with the operation
of any business which is the same as or similar to any of the Ticketmaster
Businesses.
<PAGE>
3. NON-SOLICITATION OF CUSTOMERS. During Executive's employment with the
Company and for a period of twenty-four (24) months from and after the date of
termination of Executive's employment with the Company, Executive shall not
solicit any customers of the Company or any of its subsidiaries or affiliates or
encourage any such customers to use the facilities or services of any competitor
of the Company or any of its subsidiaries or affiliates. Customer shall mean
any person who engages the Company or any of its subsidiaries or affiliates to
sell, on its behalf as agent, tickets to the public.
4. PROPRIETARY INFORMATION. Executive will not at any time (during or
for a period of sixty (60) months after termination of employment) disclose or
use, except in the pursuit of the business of the Company or any of its
subsidiaries or affiliates, any proprietary information of the Company or other
Ticketmaster Entity. "Proprietary information of the Company or other
Ticketmaster Entity" means all information known or intended to be known only to
employees of the Company or any of its subsidiaries or affiliates in a
confidential relationship with the Company or any of its subsidiaries or
affiliates relating to technical matters pertaining to the business of the
Company or other Ticketmaster Entities. Executive agrees not to remove any
documents, records or other information from the premises of the Company or any
of its subsidiaries or affiliates containing any such proprietary information,
except in the pursuit of the business of the Company or any of its subsidiaries
or affiliates, and acknowledges that such documents, records and other
information are the exclusive property of the Company or its subsidiaries or
affiliates.
5. EQUITABLE RELIEF. Executive acknowledges that the covenants contained
in Sections 1 and 4 hereof are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants the
Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to the
Company and that the remedy at law for such breach or threatened breach would be
inadequate. Accordingly, the Executive agrees that the Company, in addition to
any other rights or remedies which it may have, shall be entitled to seek such
equitable and injunctive relief as may be available from any court of competent
jurisdiction to restrain the Executive from any breach or threatened breach of
such covenants.
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 1, 1994, between Ticketmaster Corporation,
an Illinois Corporation (the "Company"), and Marc Bension ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is desirous of continuing to employ Executive, and
Executive is desirous of continuing to be employed by the Company, on the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $475,000 during the first
Contract Year and $500,000 during the second through fifth Contract Years.
(b) "BENEFIT PLAN" shall mean each vacation pay, sick pay,
retirement, welfare, medical, dental, disability, life insurance or
other employee benefit plan, program or arrangement.
(c) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(d) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(e) "COMMON STOCK" shall mean the Common Stock, no par value,
of Ticketmaster Holdings.
(f) "CONSULTING PERIOD" shall have the meaning ascribed to that term
in Section 9(a).
(g) "CONTRACT YEAR" shall mean each year during the term hereof
commencing February 1 and ending on the immediately following January 31.
(h) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(i) "DISABILITY" shall have the meaning ascribed to that term in
Section 6(a).
<PAGE>
(j) "DISABILITY PERIOD" shall have the meaning ascribed to that term
in Section 6(a).
(k) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(l) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
(m) "TICKETMASTER HOLDINGS" shall mean Ticketmaster Holdings
Group, Ltd., an Illinois corporation and the parent of the Company.
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for a
period of five years commencing on the date hereof and ending on January 31,
1999, subject to early termination as herein provided.
4. POSITION AND DUTIES. Executive shall serve as the Executive Vice
President and Chief Operating Officer of the Company. Subject to the authority
of the Board of Directors and the Chief Executive Officer of the Company, the
Executive shall have supervision and control over, and responsibility for, the
general management and operation of the Company and shall have such other powers
and duties as may from time to time be prescribed by the Board of Directors or
the Chief Executive Officer of the Company. Executive agrees to serve without
further compensation, if elected or appointed thereto, as an officer or a
director of any of the Company's subsidiaries and affiliates. During
Executive's employment by the Company, he will be entitled to indemnification as
an officer of the Company (and, if so elected, as an officer or director of any
of the Company's subsidiaries or affiliates) in the manner provided by the
Illinois Business Corporation Act of 1983, as amended, and the Company's
Articles of Incorporation and By-Laws, as amended.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote his entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(b), 9(c) and 9(d).
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount; provided, however,
that the Base Salary Amount shall not begin to accrue or be paid by the
Company until this Agreement becomes effective in the manner contemplated
by
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Section 11(1). The Base Salary Amount shall be paid to Executive in
accordance with the Company's regular payroll practices with respect to
senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, he can no longer perform the duties of
Executive Vice President and Chief Operating Officer of the Company (a
"Disability"), the Company shall only be obligated to continue to pay the
Base Salary Amount to Executive for the 120-day period immediately
following the date of Disability (the "Disability Period"); provided,
however, that if at the date of Disability the Company is not maintaining
the disability insurance policy referred to in Section 6(e), then the
Disability Period shall be extended for one additional year. The right to
receive salary payments during the Disability Period shall survive any
termination of employment by virtue of Disability pursuant to Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive an annual performance bonus as determined by
the Board of Directors or its Compensation Committee in its sole
discretion, the determination of which shall be based upon such standards,
guidelines and factual circumstances as the Board of Directors or its
Compensation Committee deems relevant, including, without limitation, the
operating results for the Company during such Contract Year, the importance
of the efforts of Executive in achieving such operating results and the
achievement by the Company and/or Executive of performance goals previously
established by the Board of Directors for such Contract Year; provided,
however, that in no event shall the bonus for any Contract Year of the term
hereof be less than $100,000.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by him in the performance of his duties hereunder, provided that
Executive properly accounts therefor in accordance with the Company's
reimbursement policy, including, without limitation, the submission of
supporting evidence as reasonably requested by the Company. While
traveling on Company business, Executive shall be entitled to
transportation and accommodations consistent with his position with the
Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled (i) to participate in and receive benefits under all of the
Company's Benefit Plans generally available
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to senior management of the Company and (ii) to receive an automobile
allowance in the amount of $1,200 per month. To the extent not covered
by the Company's Benefit Plans, Executive shall be entitled to
reimbursement from the Company for all reasonable medical and health
expenses incurred by Executive for his benefit or for the benefit of his
dependents.
(e) INSURANCE. The Company agrees to maintain in effect during the
term hereof insurance on Executive's life payable to his estate or his
named beneficiary or beneficiaries in the amount of $1,000,000; provided,
however, that Executive shall reimburse the Company for any and all
premiums paid by the Company with respect to such insurance in excess of
the preferred or select premium rate for non-smokers. In addition, so long
as Executive is insurable at standard insurable rates, the Company agrees
to also maintain in effect during the term hereof a disability insurance
policy whereby Executive will be entitled to receive the Base Salary Amount
during the two-year period immediately following the end of a Disability
Period.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three weeks paid
vacation during each Contract Year.
(g) STOCK OPTIONS. Upon the adoption by Ticketmaster Holdings of a
stock option plan for senior management of Ticketmaster Holdings and its
subsidiaries, Executive shall be entitled to receive non-statutory stock
options to purchase 212,089 shares of Common Stock at an exercise price of
$4.715 per share plus such amount, if any, determined by dividing
36,699,041 (as adjusted for any stock dividend, stock split or combination
or similar transaction involving the Common Stock) into any additional
capital contribution made by Paul Allen and Ticketmaster Holdings pursuant
to a letter agreement, dated December 15, 1993, between Paul Allen and
Ticketmaster Holdings. The stock options will only be exercisable to the
extent that Executive is then vested in such stock options. Executive
shall vest in 25% of the stock options on February 1, 1995 (unless
this Agreement does not become effective, pursuant to Section 11(1),
before March 1, 1995, in which event the initial 25% of the stock
options shall vest on the first anniversary of the effective date) and
shall vest in the remaining 75% of the stock options monthly pro rata
over the 36 month period immediately following the vesting date of the
initial 25% of the stock options. Notwithstanding the foregoing, in the
event that a stock option plan for senior management of Ticketmaster
Holdings and its subsidiaries has not been adopted by Tickemaster
Holdings by July 31, 1994,
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<PAGE>
Executive shall be entitled to receive non-statutory stock options
(separate from, and instead of under, a stock option plan) upon the same
terms as set forth above. Any stock options granted to Executive pursuant
to this Section 6 shall not be affected by any modifications to or the
subsequent termination of any stock option plan, if adopted, unless
required by law.
7. TERMINATION. The Company or Executive may terminate the employment
of Executive hereunder upon the occurrence of a Disability (as defined in
Section 6(a)) for a period of no less than 120 days during any consecutive
twelve-month period. The Company may also terminate the employment of Executive
hereunder upon Executive's death or for Cause. For purposes hereof, "Cause"
shall mean (i) fraud, theft, misappropriation of funds or conviction of a
felony, (ii) Executive's engagement in illegal conduct tending to place
Executive or the Company in disrepute, (iii) dereliction or gross misconduct in
Executive's performance of his duties as an employee of the Company or the
failure of Executive to perform his duties in a manner consistent with the
instructions of the Board of Directors or the Chief Executive Officer of the
Company or (iv) violation by Executive of any of his material covenants
contained in this Agreement, including, without limitation, Section 10.
Notwithstanding the foregoing, before the Company may terminate the employment
of Executive for Cause, the Company shall deliver to Executive not less than ten
business days prior written notice of the Company's intention to terminate
Executive's employment together with a statement of the basis for such
termination, and Executive shall be afforded (i) an opportunity to respond to
the Company during such ten-business day period and (ii) in the event that the
basis for such termination is clause (iii) or (iv) above, an opportunity
to remedy the situation resulting in the Company's determination to
terminate for Cause so long as such situation is non-repetitive in
nature. Upon the termination of Executive's employment for any reason,
Executive shall be entitled to receive all compensation (including,
without limitation, a pro rata portion of the minimum annual performance
bonus, unless such termination is for Cause) for the then current
Contract Year through the date of such termination plus all accrued but
unreimbursed expenses. In addition, upon the termination of Executive's
employment for any reason other than for or by virtue of Cause, death,
Disability, an injunction or other similar equitable relief being
granted by a court in favor of Executive's former employer which results
in Executive's inability to perform this Agreement, or Executive's
voluntary termination of employment, the Company shall continue to be
responsible for the payment of all Base Salary Amount and minimum annual
performance bonuses for the remainder of the term hereof; provided,
however, that Executive shall have a duty to mitigate (as to a new
position comparable to Executive's position and salary hereunder)
commencing on the first anniversary of the date of termination; and,
further provided that Executive shall perform his covenants, duties and
obligations under Sections 9(b), 9(c) and 9(d) during the remainder of
the term hereof.
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<PAGE>
Termination of Executive's employment shall not affect Executive's
ability to exercise stock options that have vested prior to the date of
termination.
8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
developed or perfected by him during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and he will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefor; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on his own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
consultant will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out his duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities. In consideration of Executive's consulting
services, and in consideration of Executive's covenants contained in
this Section 9, the Company shall pay to Executive $50,000 during each
full year of the Consulting Period, payable on the last day of each such
year. The Company further agrees to reimburse Executive for all
reasonable and necessary business expenses incurred by
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<PAGE>
Executive in the performance of his consulting services in accordance
with the Company's reimbursement policy, including, without limitation,
the submission of supporting evidence as reasonably required by the
Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in, advise, consult with, be employed by, perform legal services for or
manage entities which sell tickets as an incidental part of their primary
businesses (e.g. cable networks, on-line computer services, sport teams,
arenas, hotels, cruise lines, theatrical and movie productions and the
like) and which do not hold themselves out generally as competitors of the
Company and its subsidiaries and affiliates. The "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical,
cinematic, live theatrical, musical or any other events on behalf of
various venues and promoters through distribution channels currently being
utilized by the Company or any of its subsidiaries or affiliates (as such
term is defined in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended).
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Ticketmaster Businesses.
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(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or Affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for
a period of sixty (60) months after termination of employment) disclose
(except as may be required by law) or use, except in the pursuit of the
business of the Company or any of its subsidiaries or affiliates, any
Proprietary Information of the Company. "Proprietary Information of the
Company" means all information known or intended to be known only to
employees of the Company or any of its subsidiaries or affiliates in a
confidential relationship with the Company or any of its subsidiaries or
affiliates relating to technical matters pertaining to the business of the
Company or any of its subsidiaries or affiliates, but shall not include any
information within the public domain. Executive agrees not to remove any
documents, records or other information from the premises of the Company or
any of its subsidiaries or affiliates containing any such proprietary
information, except in the pursuit of the business of the Company or any of
its subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the Company or
its subsidiaries or affiliates. Upon termination of Executive's
employment, Executive shall immediately return all Proprietary Information
of the Company and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
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(a) If to the Company:
Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chairman of the Board
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(b) If to Executive:
Marc Bension
14504 Valley Vista
Sherman Oaks, California 91403
Telecopy No.: (818) 990-6223
With a copy to:
Katz, Smith, & Cohen
3423 Piedmont Road
Suite 200
Atlanta, Georgia 30505
Attention: Joel Katz
Telecopy No.: (404) 237-5260
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to his spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, his spouse. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to
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live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's designee or, if
there be no such designee, to Executive's heirs, devisees, legatees or
executors or administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of the Executive), except that such consent shall not be
required in order for the Company to assign this Agreement or the rights
or duties hereunder to an affiliate (as such term is defined in Section
9(b)) of the Company or to a third party in connection with the merger
or consolidation of the Company with, or the sale of all or
substantially all of the assets or business of the Company to, that
third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of
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any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure
of any party to assert any of its rights hereunder shall not constitute a
waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable
to contracts executed in and to be performed entirely within that state.
(j) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(k) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(l) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument; provided,
however, that, notwithstanding anything to the contrary contained herein,
this Agreement shall not become effective unless or until the parties
hereto exchange counterparts hereof. The Company shall be obligated to
exchange counterparts if it receives on or before April 30, 1994 written
notice from Executive that he is no longer employed by MCA, Inc. or any
other person, that he is no longer obligated to any such former employer in
a manner that would materially interfere with his performance hereunder and
that, to the best of his knowledge, his performance hereunder will not
result in a breach of or a default under his employment agreement with MCA,
Inc.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
TICKETMASTER CORPORATION
By:
--------------------------------
Title:
-----------------------------
-------------------------------------
MARC BENSION
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AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is entered into this
31st day of January, 1996, by and between Ticketmaster Corporation, an Illinois
corporation ("Ticketmaster") and Marc Bension, an individual ("Executive:), with
reference to the following facts:
WHEREAS, Ticketmaster and Executive entered into that certain Employment
Agreement dated as of February 1, 1994.
WHEREAS, Ticketmaster and Executive hereby desire to amend the Employment
Agreement in the manner set forth herein.
NOW, THEREFORE, in consideration of the mutual premises and covenants set
forth herein, the parties hereby agree as follows:
1. DEFINED TERM(S). All capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Employment Agreement.
2. MODIFICATION OF TERMS.
(a) Section 4 of the Employment Agreement is hereby deleted in its
entirety and replaced with the following provision:
"4. POSITION AND DUTIES. Executive shall serve as the Executive Vice
President of the Company. Subject to the authority of the Board of Directors
and the Chief Executive Officer of the Company, the Executive shall have such
powers and duties as may from time to time be prescribed by the Board of
Directors or the Chief Executive Officer of the Company. Executive agrees to
serve without further compensation, if elected or appointed thereto, as an
officer or a director of any of the Company's subsidiaries and affiliates.
During Executive's employment by the Company, he will be entitled to
indemnification as an officer of the Company (and, if so elected, as an officer
or director of any of the Company's subsidiaries or affiliates) in the manner
provided by the Illinois Business Corporation Act of 1983, as amended, and the
Company's Articles of Incorporation and By-Laws, as amended."
(b) The sixth line of the second paragraph of Section 6 (a) of the
Employment Agreement is hereby modified by deleting the words "and Chief
Operating Officer" from said provision.
3. CONFLICTING TERMS. In the event a conflict arises between this
Amendment and the terms and conditions of the Employment Agreement, then the
terms and conditions of this Amendment shall control.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
TICKETMASTER CORPORATION
an Illinois corporation
By: /s/ Fredric D Rosen /s/ Marc Bension
----------------------- ---------------------------
Title: President Marc Bension, an individual
--------------------
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 1, 1994, between Ticketmaster Holdings
Group, Ltd., an Illinois Corporation (the "Company"), and Ned S. Goldstein
("Executive").
W I T N E S S E T H:
WHEREAS, prior to the date hereof, Executive has been employed by the
Company as its Vice President and General Counsel; and
WHEREAS, the Company is desirous of continuing to employ Executive, and
Executive is desirous of continuing to be employed by the Company, on the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $225,000 during the first
Contract Year, $250,000 during the second Contract Year, $270,000 during
the third Contract Year, $290,000 during the fourth Contract Year and
$300,000 during the fifth Contract Year.
(b) "BENEFIT PLAN" shall mean each vacation pay, sick pay,
retirement, pension, profit sharing, welfare, medical, dental, disability,
life insurance, deferred compensation, incentive compensation, stock
issuance and option or other employee benefit plan, program or arrangement
of any kind or nature whatsoever, if any.
(c) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(d) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(e) "COMMON STOCK" shall mean the Common Stock, no par value, of the
Company.
(f) "CONSULTING PERIOD" shall have the meaning ascribed to that term
in Section 9(a).
(g) "CONTRACT YEAR" shall mean each year during the term hereof
commencing February 1 and ending on the immediately following January 31.
<PAGE>
(h) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(i) "DISABILITY" shall have the meaning ascribed to that term in
Section 6(a).
(j) "DISABILITY PERIOD" shall have the meaning ascribed to that term
in Section 6(a).
(k) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(l) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for a
period of five years commencing on the date hereof and ending on January 31,
1999, subject to early termination as herein provided. The Company and
Executive shall negotiate an extension to the term of this Agreement during the
first 60 days of the fifth Contract Year.
4. POSITION AND DUTIES. Executive shall serve as a Vice President and
General Counsel of the Company. Subject to the authority of the Board of
Directors and the Chief Executive Officer of the Company, the Executive shall
have all of the powers and duties incident to the office of Vice President and
General Counsel and such other powers and duties as may from time to time be
prescribed by the Board of Directors or the Chief Executive Officer of the
Company. Executive agrees to serve without further compensation, if elected or
appointed thereto, as an officer or a director of any of the Company's domestic
and foreign subsidiaries and affiliates. During Executive's employment by the
Company, he will be entitled to indemnification as an officer of the Company
(and, if so elected, as an officer or director of any of the Company's domestic
and foreign subsidiaries or affiliates) in the manner provided by the Illinois
Business Corporation Act of 1983, as amended, the Company's Articles of
Incorporation and By-Laws, as amended, and the existing indemnity agreement
between Executive and the Company.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote his entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(b), 9(c) and 9(d).
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<PAGE>
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, he can no longer perform the duties of Vice
President, and General Counsel of the Company (a "Disability"), the Company
shall only be obligated to continue to pay the Base Salary Amount to
Executive for the 120-day period immediately following the date of
Disability (the "Disability Period"). The right to receive salary payments
during the Disability Period, if applicable, shall survive any termination
of employment by virtue of Disability pursuant to Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive an annual performance bonus as determined by
the Board of Directors or its Compensation Committee in its sole
discretion, the determination of which shall be based upon such standards,
guidelines and factual circumstances as the Board of Directors or its
Compensation Committee deems relevant, including, without limitation, the
operating results for the Company during such Contract Year, the importance
of the efforts of Executive in achieving such operating results and the
achievement by the Company and/or Executive of performance goals previously
established by the Board of Directors for such Contract Year; provided,
however, that in no event shall the bonus for any Contract Year of the term
hereof be less than (i) $50,000 for a full Contract Year or (ii) a pro rata
portion of $50,000 for a partial Contract Year.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by him in the performance of his duties hereunder, provided that
Executive properly accounts therefor in accordance with the Company's
reimbursement policy, including, without limitation, the submission of
supporting evidence as reasonably requested by the Company. While
traveling on Company business, Executive shall be entitled to
transportation and accommodations consistent with other senior executives
of the Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled (i) to participate in and receive benefits under all of the
Company's Benefit Plans generally available
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to senior management of the Company and (ii) to receive an automobile allowance
in the amount of $1,200 per month. To the extent not covered by the Company's
Benefit Plans, Executive shall be entitled to reimbursement from the Company for
all reasonable medical and health expenses incurred by Executive for his benefit
or for the benefit of his dependents.
(e) INSURANCE. The Company agrees to maintain in effect during the
term hereof insurance on Executive's life payable to his estate or his
named beneficiary or beneficiaries in the amount of $1,000,000; provided,
however, that Executive shall reimburse the Company for any and all
premiums paid by the Company with respect to such insurance in excess of
the preferred or select premium rate for non-smokers. In addition, so long
as Executive is insurable at standard insurable rates (which rates shall in
no event increase during any Contract Year by a percentage greater than the
percentage increase in the consumer price index for all urban workers
(1967=100) over the indexed figure for the immediately preceding Contract
Year, in each case measured as of the month of February), the Company
agrees to also maintain in effect during the term hereof a disability
insurance policy of the type currently maintained by the Company for its
Chief Financial Officer; provided, however, that in the event Executive is
not insurable at such standard insurable rates, the Company will
nevertheless maintain such disability insurance policy (if available) so
long as Executive pays the difference in premium.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for senior management).
(g) STOCK OPTIONS. Upon the adoption by the Company of a stock
option plan for senior management of the Company and its subsidiaries,
Executive shall be entitled to receive non-statutory stock options to
purchase 212,089 shares of Common Stock at an exercise price of $4.715 per
share plus such amount, if any, determined by dividing 36,699,041 (as
adjusted for any stock dividend, stock split or combination or similar
transaction involving the Common Stock) into any additional capital
contribution made by Paul Allen to the Company pursuant to a letter
agreement, dated December 15, 1993, between Paul Allen and the Company.
The stock options will only be exercisable to the extent that Executive is
then vested in such stock options. Executive shall vest in 33 1/3% of the
stock options on February 1, 1995 and shall vest in the remaining 66 2/3%
of the stock options monthly pro rata over
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the 24 month period immediately following the vesting date of the initial
33 1/3% of the stock options. Notwithstanding the foregoing, in the event
that a stock option plan for senior management of the Company and its
subsidiaries has not been adopted by the Company by July 31, 1994,
Executive shall be entitled to receive non-statutory stock options
(separate from, and instead of under, a stock option plan) upon the same
terms as set forth above. Any stock options granted to Executive pursuant
to this Section 6 shall not be affected by any modifications to or the
subsequent termination of any stock option plan, if adopted, unless
required by law.
7. TERMINATION. The Company or Executive may terminate the employment of
Executive hereunder upon the occurrence of a Disability (as defined in Section
6(a)) for a period of no less than 120 days during any consecutive twelve-month
period. The Company may also terminate the employment of Executive hereunder
upon Executive's death or for Cause. For purposes hereof, "Cause" shall mean
(i) fraud, theft, misappropriation of funds or conviction of a felony, (ii)
Executive's engagement in illegal conduct tending to place Executive or the
Company in disrepute, (iii) dereliction or gross misconduct in Executive's
performance of his duties as an employee of the Company or the failure of
Executive to perform his duties in a manner consistent with the instructions of
the Board of Directors or the Chief Executive Officer of the Company or (iv)
violation by Executive of any of his material covenants contained in this
Agreement, including, without limitation, Section 10. Notwithstanding the
foregoing, before the Company may terminate the employment of Executive for
Cause, the Company shall deliver to Executive not less than ten business days
prior written notice of the Company's intention to terminate Executive's
employment together with a statement of the basis for such termination, and
Executive shall be afforded (i) an opportunity to respond to the Company during
such ten-business day period and (ii) in the event that the basis for such
termination is clause (iii) or (iv) above, and the situation resulting in the
Company's determination to terminate for cause is non-repetitive in nature, the
right to remedy such situation so that such termination is no longer effective.
Upon the termination of Executive's employment for any reason, Executive shall
be entitled to receive all compensation (including, without limitation, a pro
rata portion of the minimum annual performance bonus, unless such termination is
for Cause) for the then current Contract Year through the date of such
termination plus all accrued but unreimbursed expenses. In addition, upon the
termination of Executive's employment for any reason other than for or by virtue
of Cause, death, Disability or Executive's voluntary termination of employment,
the Company shall continue to be responsible for the payment of all Base Salary
Amount and minimum annual performance bonuses for the remainder of the term
hereof; provided, however, that Executive shall have a duty to mitigate (as to a
new position comparable to Executive's position and salary hereunder) commencing
on the first anniversary
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<PAGE>
of the date of termination; and, further provided that Executive shall perform
his covenants, duties and obligations under Sections 9(b), 9(c) and 9(d) during
the remainder of the term hereof. Termination of Executive's employment for any
reason whatsoever shall not affect Executive's ability to exercise stock options
that have vested prior to the date of termination.
8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
developed or perfected by him during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and he will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefor; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on his own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
consultant will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out his duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of
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<PAGE>
Executive's covenants contained in this Section 9, the Company shall pay to
Executive $30,000 during each full year of the Consulting Period, payable
in equal monthly installments. The Company further agrees to reimburse
Executive for all reasonable and necessary business expenses incurred by
Executive in the performance of his consulting services in accordance with
the Company's reimbursement policy, including, without limitation, the
submission of supporting evidence as reasonably required by the Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in, advise, consult with, be employed by, perform legal services for or
manage entities which sell tickets as an incidental part of their primary
businesses (e.g. cable networks, on-line computer services, sport teams,
arenas, hotels, cruise lines, theatrical and movie productions and the
like) and which do not hold themselves out generally as competitors of the
Company and its subsidiaries and affiliates. The "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical,
cinematic, live theatrical, musical or any other events on behalf of
various venues and promoters through distribution channels currently being
utilized by the Company or any of its subsidiaries or affiliates (as such
term is defined in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended).
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person
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<PAGE>
(whether or not for compensation) as an officer, employee, consultant,
adviser or independent contractor in connection with the operation of any
business which is the same as or similar to any of the Ticketmaster
Businesses.
(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees
not to remove any documents, records or other information from the premises of
the Company or any of its subsidiaries or affiliates containing any such
proprietary information, except in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as
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shall be specified in a notice given in accordance with this Section
11(b)):
(i) If to the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chairman of the Board
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Ned S. Goldstein
13929 Magnolia Boulevard
Sherman Oaks, California 91423
Telecopy No.: (818) 784-7744
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to his spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, his spouse. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
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<PAGE>
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) ENTIRE AGREEMENT. This Agreement (together with the existing
indemnity agreement between Executive and the Company and any applicable
option agreements pursuant to Section 6(g)) constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an affiliate (as such term is defined in Section 9(b)) of the
Company or to a third party in connection with the merger or consolidation
of the Company with, or the sale of all or substantially all of the assets
or business of the Company to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its
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rights hereunder shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable
to contracts executed in and to be performed entirely within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State of California is an inconvenient forum or an improper forum based on
lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
TICKETMASTER HOLDINGS GROUP, LTD.
By:
--------------------------------
Title:
-----------------------------
-------------------------------------
NED S. GOLDSTEIN
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EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated as of February 1, 1994, between Ticketmaster Holdings
Group, Ltd., an Illinois Corporation (the "Company"), and Peter B. Knepper
("Executive").
W I T N E S S E T H:
WHEREAS, prior to the date hereof, Executive has been employed by the
Company as its Vice President, Treasurer and Chief Financial Officer; and
WHEREAS, the Company is desirous of continuing to employ Executive, and
Executive is desirous of continuing to be employed by the Company, on the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $245,000 during the first
Contract Year, $275,000 during the second Contract Year, $285,000 during
the third Contract Year, $300,000 during the fourth Contract Year and
$310,000 during the fifth Contract Year.
(b) "BENEFIT PLAN" shall mean each vacation pay, sick pay,
retirement, welfare, medical, dental, disability, life insurance, deferred
compensation, incentive compensation, stock option or other employee benefit
plan, program or arrangement, if any.
(c) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(d) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(e) "COMMON STOCK" shall mean the Common Stock, no par value, of the
Company.
(f) "CONSULTING PERIOD" shall have the meaning ascribed to that term
in Section 9(a).
(g) "CONTRACT YEAR" shall mean each year during the term hereof
commencing February 1 and ending on the immediately following January 31.
<PAGE>
(h) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(i) "DISABILITY" shall have the meaning ascribed to that term in
Section 6(a).
(j) "DISABILITY PERIOD" shall have the meaning ascribed to that term
in Section 6(a).
(k) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(l) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for a
period of five years commencing on the date hereof and ending on January 31,
1999, subject to early termination as herein provided. The Company and
Executive shall negotiate an extension to the term of this Agreement during the
first 60 days of the fifth Contract Year.
4. POSITION AND DUTIES. Executive shall serve as the Treasurer and
Chief Financial Officer of the Company. Subject to the authority of the Board
of Directors and the Chief Executive Officer of the Company, the Executive shall
have all of the powers and duties incident to the office of treasurer and such
other powers and duties as may from time to time be prescribed by the Board of
Directors or the Chief Executive Officer of the Company. Executive agrees to
serve without further compensation, if elected or appointed thereto, as an
officer or a director of any of the Company's domestic and foreign subsidiaries
and affiliates. During Executive's employment by the Company, he will be
entitled to indemnification as an officer of the Company (and, if so elected, as
an officer or director of any of the Company's domestic and foreign subsidiaries
or affiliates) in the manner provided by the Illinois Business Corporation Act
of 1983, as amended, and the Company's Articles of Incorporation and By-Laws, as
amended.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote his entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(b), 9(c) and 9(d).
6. COMPENSATION AND OTHER BENEFITS.
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(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
In the even that Executive shall become disabled as a result of bodily
injury or physical or mental illness (whether or not occupational) to such
extent that in the sole opinion of the Board of Directors, based upon
competent medical advice, he can no longer perform the duties of Vice
President, Treasurer and Chief Financial Officer of the Company (a
"Disability"), the Company shall only be obligated to continue to pay the
Base Salary Amount to Executive for the 120-day period immediately
following the date of Disability (the "Disability Period"). The right to
receive salary payment during the Disability Period, if applicable, shall
survive any termination of employment by virtue of Disability pursuant to
Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive an annual performance bonus as determined by
the Board of Directors or its Compensation Committee in its sole
discretion, the determination of which shall be based upon such standards,
guidelines and factual circumstances as the Board of Directors or its
Compensation Committee deems relevant, including, without limitation, the
operating results for the Company during such Contract Year, the
importance of the efforts of Executive in achieving such operating results
and the achievement by the Company and/or Executive of performance goals
previously established by the Board of Directors for such Contract Year;
provided, however, that in no event shall the bonus for any full Contract
Year of the term hereof be less than $50,000.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses incurred
by him in the performance of his duties hereunder, provided that Executive
properly accounts therefor in accordance with the Company's reimbursement
policy, including, without limitation, the submission of supporting evidence
as reasonably requested by the Company. While traveling on Company
business, Executive shall be entitled to transportation and accommodations
consistent with his position with the Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled (i) to participate in and receive benefits under all of the
Company's Benefit Plans generally available to senior management of the
Company and (ii) to receive an automobile allowance in the amount of $1,200
per month. To
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the extent not covered by the Company's Benefit Plans, Executive shall be
entitled to reimbursement from the Company for all reasonable medical and
health expenses incurred by Executive for his benefit or for the benefit of
his dependents.
(e) INSURANCE. The Company agrees to maintain in effect during the
term hereof insurance on Executive's life payable to his estate or his
named beneficiary or beneficiaries in the amount of $1,000,000; provided,
however, that Executive shall reimburse the Company for any and all
premiums paid by the Company with respect to such insurance in excess of
the preferred or select premium rate for non-smokers. In addition, so long
as Executive is insurable at standard insurable rates (which rates shall in
no event increase during any Contract Year by a percentage greater than the
percentage increase in the consumer price index for all urban workers
(1967=100) over the indexed figure for the immediately preceding Contract
Year, in each case measured as of the month of February), the Company
agrees to also maintain in effect during the term hereof a disability
insurance policy with coverage substantially equivalent to the coverage
under the disability insurance policy now in effect with respect to
Executive.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for senior management).
(g) STOCK OPTIONS. Upon the adoption by the Company of a stock
option plan for senior management of the Company and its subsidiaries,
Executive shall be entitled to receive non-statutory stock options to
purchase 212,089 shares of Common Stock at an exercise price of $4.715 per
share plus such amount, if any, determined by dividing 36,699,041 (as
adjusted for any stock dividend, stock split or combination or similar
transaction involving the Common Stock) into any additional capital
contribution made by Paul Allen to the Company pursuant to a letter
agreement, dated December 15, 1993, between Paul Allen and the Company. The
stock options will only be exercisable to the extent that Executive is then
vested in such stock options. Executive shall vest in 33 1/3% of the stock
options on February 1, 1995 and shall vest in the remaining 66 2/3% of the
stock options monthly pro rata over the 24 month period immediately
following the vesting date of the initial 33 1/3% of the stock options.
Notwithstanding the foregoing, in the event that a stock option plan for
senior management of the Company and its subsidiaries has not been
adopted by the Company by July 31, 1994, Executive shall be
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entitled to receive non-statutory stock options (separate from, and instead
of under, a stock option plan) upon the same terms as set forth above. Any
stock options granted to Executive pursuant to this Section 6 shall not be
affected by any modifications to or the subsequent termination of any stock
option plan, if adopted, unless required by law.
7. TERMINATION. The Company or Executive may terminate the employment
of Executive hereunder upon the occurrence of a Disability (as defined in
Section 6(a)) for a period of no less than 120 days during any consecutive
twelve-month period. The Company may also terminate the employment of
Executive hereunder upon Executive's death or for Cause. For purposes
hereof, "Cause" shall mean (i) fraud, theft, misappropriation of funds or
conviction of a felony, (ii) Executive's engagement in illegal conduct
tending to place Executive or the Company in disrepute, (iii) dereliction or
gross misconduct in Executive's performance of his duties as an employee of
the Company or the failure of Executive to perform his duties in a manner
consistent with the instructions of the Board of Directors or the Chief
Executive Officer of the Company or (iv) violation by Executive of any of his
material covenants contained in this Agreement, including, without
limitation, Section 10. Notwithstanding the foregoing, before the Company
may terminate the employment of Executive for Cause, the Company shall
deliver to Executive not less than ten business days prior written notice of
the Company's intention to terminate Executive's employment together with a
statement of the basis for such termination, and Executive shall be afforded
(i) an opportunity to respond to the Company during such ten-business day
period and (ii) in the event that the basis for such termination is clause
(iii) or (iv) above, an opportunity to remedy the situation resulting in the
Company's determination to terminate for Cause is non-repetitive in nature.
Upon the termination of Executive's employment for any reason, Executive
shall be entitled to receive all compensation (including, without limitation,
a pro rata portion of the minimum annual performance bonus, unless such
termination is for Cause) for the then current Contract Year through the date
of such termination plus all accrued but unreimbursed expenses. In addition,
upon the termination of Executive's employment for any reason other than for
or by virtue of Cause, death, Disability or Executive's voluntary termination
of employment, the Company shall continue to be responsible for the payment
of all Base Salary Amount and minimum annual performance bonuses for the
remainder of the term hereof; provided, however, that Executive shall have a
duty to mitigate commencing on the first anniversary of the date of
termination; and, further provided that Executive shall perform his
covenants, duties and obligations under Sections 9(b), 9(c) and 9(d) during
the remainder of the term hereof. Termination of Executive's employment
shall not affect Executive's ability to exercise stock options that have
vested prior to the date of termination.
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8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
developed or perfected by him during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and he will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefor; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on his own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
consultant will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out his duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $30,000 during each full year of the
Consulting Period, payable in equal monthly installments. The Company
further agrees to reimburse Executive for all reasonable and necessary
business expenses incurred by Executive in the performance of his
consulting services in accordance with the Company's reimbursement policy,
including,
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without limitation, the submission of supporting evidence as reasonably
required by the Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in or manage entities which sell tickets as an incidental part of their
primary businesses (e.g. cable networks, on-line computer services, sport
teams, arenas, hotels, cruise lines, theatrical and movie productions and
the like) and which do not hold themselves out generally as competitors of
the Company and its subsidiaries and affiliates. The "Ticketmaster
Businesses" shall mean the computerized sale of tickets for sporting,
theatrical, cinematic, live theatrical, musical or any other events on
behalf of various venues and promoters through distribution channels
currently being utilized by the Company or any of its subsidiaries or
affiliates (as such term is defined in Rule 405 of Regulation C promulgated
under the Securities Act of 1933, as amended).
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Ticketmaster Businesses.
(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or
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encourage (regardless of who initiates the contact) any such Customers to
use the facilities or services of any Competitor of the Company or any of
its subsidiaries or affiliates. "Customer" shall mean any person who
engages the Company or any of its subsidiaries or affiliates to sell, on
its behalf as agent, tickets to the public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees
not to remove any documents, records or other information from the premises of
the Company or any of its subsidiaries or affiliates containing any such
proprietary information, except in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
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(i) If to the Company:
Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chairman of the Board
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Peter B. Knepper
3004 Palos Verdes Drive West
Palos Verdes Estate, California 90274
Telecopy No.: ( )
--- ----------
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to his spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, his spouse. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such
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provisions shall be fully severable, the Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from
this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
(f) ENTIRE AGREEMENT. This Agreement (together with any applicable
option agreements pursuant to Section 6(g)) constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an affiliate (as such term is defined in Section 9(b)) of the
Company or to a third party in connection with the merger or consolidation
of the Company with, or the sale of all or substantially all of the assets
or business of the Company to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
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Illinois, applicable to contracts executed in and to be performed entirely
within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State of California is an inconvenient forum or an improper forum based on
lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
TICKETMASTER HOLDINGS GROUP, LTD.
By:
--------------------------------
Title:
-----------------------------
-------------------------------------
PETER B. KNEPPER
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 1, 1994, between Ticketmaster Holdings
Group, Ltd., an Illinois Corporation (the "Company"), and Ann Mooney
("Executive").
W I T N E S S E T H:
WHEREAS, prior to the date hereof, Executive has been employed by the
Company as its Vice President-Administration; and
WHEREAS, the Company is desirous of continuing to employ Executive, and
Executive is desirous of continuing to be employed by the Company, on the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $132,500 during the first
Contract Year, $145,000 during the second Contract Year, $155,000 during
the third Contract Year, $160,000 during the fourth Contract Year and
$167,500 during the fifth Contract Year.
(b) "BENEFIT PLAN" shall mean each vacation pay, sick pay,
retirement, welfare, medical, dental, disability, life insurance, deferred
compensation, incentive compensation, stock option or other employee
benefit plan, program or arrangement, if any.
(c) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(d) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(e) "COMMON STOCK" shall mean the Common Stock, no par value, of the
Company.
(f) "CONSULTING PERIOD" shall have the meaning ascribed to that term
in Section 9(a).
(g) "CONTRACT YEAR" shall mean each year during the term hereof
commencing February 1 and ending on the immediately following January 31.
<PAGE>
(h) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(i) "DISABILITY" shall have the meaning ascribed to that term in
Section 6(a).
(j) "DISABILITY PERIOD" shall have the meaning ascribed to that term
in Section 6(a).
(k) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(l) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for a
period of five years commencing on the date hereof and ending on January 31,
1999, subject to early termination as herein provided; provided, however, that
Executive may terminate this Agreement prior to its expiration date in the event
that she is offered employment by Fredric D. Rosen or a third party in the
manner contemplated by that certain letter, dated December 14, 1993, from the
Company to Mr. Rosen. The Company and Executive shall negotiate an extension to
the term of this Agreement during the first 60 days of the fifth Contract Year.
4. POSITION AND DUTIES. Executive shall serve as the Vice President-
Administration of the Company. Subject to the authority of the Board of
Directors and the Chief Executive Officer of the Company, the Executive shall
have all of the powers and duties incident to the office of Vice President-
Administration and such other powers and duties as may from time to time be
prescribed by the Board of Directors or the Chief Executive Officer of the
Company. Executive agrees to serve without further compensation, if elected or
appointed thereto, as an officer or a director of any of the Company's domestic
and foreign subsidiaries and affiliates. During Executive's employment by the
Company, she will be entitled to indemnification as an officer of the Company
(and, if so elected, as an officer or director of any of the Company's domestic
and foreign subsidiaries or affiliates) in the manner provided by the Illinois
Business Corporation Act of 1983, as amended, and the Company's Articles of
Incorporation and By-Laws, as amended.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote her entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(b), 9(c) and 9(d).
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6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, she can no longer perform the duties of Vice
President-Administration of the Company (a "Disability"), the Company shall
only be obligated to continue to pay the Base Salary Amount to Executive
for the 120-day period immediately following the date of Disability (the
"Disability Period"). The right to receive salary payments during the
Disability Period, if applicable, shall survive any termination of
employment by virtue of Disability pursuant to Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive an annual performance bonus as determined by
the Board of Directors or its Compensation Committee in its sole
discretion, the determination of which shall be based upon such standards,
guidelines and factual circumstances as the Board of Directors or its
Compensation Committee deems relevant, including, without limitation, the
operating results for the Company during such Contract Year, the importance
of the efforts of Executive in achieving such operating results and the
achievement by the Company and/or Executive of performance goals previously
established by the Board of Directors for such Contract Year; provided,
however, that in no event shall the bonus for any full Contract Year of the
term hereof be less than $30,000.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by her in the performance of her duties hereunder, provided that
Executive properly accounts therefor in accordance with the Company's
reimbursement policy, including, without limitation, the submission of
supporting evidence as reasonably requested by the Company. While
traveling on Company business, Executive shall be entitled to
transportation and accommodations consistent with her position with the
Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled (i) to participate in and receive benefits under all of the
Company's Benefit Plans generally available to senior management of the
Company, (ii) to continue to
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receive her existing automobile allowance so long as she continues to use
the automobile being used by her as of the date of this Agreement and (iii)
at such time as Executive ceases to use the automobile being used by her as
of the date of this Agreement, to receive an automobile allowance in the
amount of $1,200 per month. To the extent not covered by the Company's
Benefit Plans, Executive shall be entitled to reimbursement from the
Company for all reasonable medical and health expenses incurred by
Executive for her benefit or for the benefit of her dependents.
(e) INSURANCE. The Company agrees to maintain in effect during the
term hereof insurance on Executive's life payable to his estate or his
named beneficiary or beneficiaries in the amount of $500,000; provided,
however, that Executive shall reimburse the Company for any and all
premiums paid by the Company with respect to such insurance in excess of
the preferred or select premium rate for non-smokers. In addition, so long
as Executive is insurable at standard insurable rates (which rates shall in
no event increase during any Contract Year by a percentage greater than the
percentage increase in the consumer price index for all urban workers
(1967=100) over the indexed figure for the immediately preceding Contract
Year, in each case measured as of the month of February), the Company
agrees to also maintain in effect during the term hereof a disability
insurance policy of the type currently maintained by the Company for its
Chief Financial Officer.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for senior management).
(g) STOCK OPTIONS. Upon the adoption by the Company of a stock
option plan for senior management of the Company and its subsidiaries,
Executive shall be entitled to receive non-statutory stock options to
purchase 159,066 shares of Common Stock at an exercise price of $4.715 per
share plus such amount, if any, determined by dividing 36,699,041 (as
adjusted for any stock dividend, stock split or combination or similar
transaction involving the Common Stock) into any additional capital
contribution made by Paul Allen to the Company pursuant to a letter
agreement, dated December 15, 1993, between Paul Allen and the Company.
The stock options will only be exercisable to the extent that Executive is
then vested in such stock options. Executive shall vest in 33 1/3% of the
stock options on February 1, 1995 and shall vest in the remaining 66 2/3%
of the stock options monthly pro rata over the 24 month period immediately
following the vesting date of
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the initial 33 1/3% of the stock options. Notwithstanding the foregoing,
in the event that a stock option plan for senior management of the Company
and its subsidiaries has not been adopted by the Company by July 31, 1994,
Executive shall be entitled to receive non-statutory stock options
(separate from, and instead of under, a stock option plan) upon the same
terms as set forth above. Any stock options granted to Executive pursuant
to this Section 6 shall not be affected by any modifications to or the
subsequent termination of any stock option plan, if adopted, unless
required by law.
7. TERMINATION. The Company or Executive may terminate the employment of
Executive hereunder upon the occurrence of a Disability (as defined in Section
6(a)) for a period of no less than 120 days during any consecutive twelve-month
period. The Company may also terminate the employment of Executive hereunder
upon Executive's death or for Cause. For purposes hereof, "Cause" shall mean
(i) fraud, theft, misappropriation of funds or conviction of a felony, (ii)
Executive's engagement in illegal conduct tending to place Executive or the
Company in disrepute, (iii) dereliction or gross misconduct in Executive's
performance of her duties as an employee of the Company or the failure of
Executive to perform her duties in a manner consistent with the instructions of
the Board of Directors or the Chief Executive Officer of the Company or (iv)
violation by Executive of any of her material covenants contained in this
Agreement, including, without limitation, Section 10. Notwithstanding the
foregoing, before the Company may terminate the employment of Executive for
Cause, the Company shall deliver to Executive not less than ten business days
prior written notice of the Company's intention to terminate Executive's
employment together with a statement of the basis for such termination, and
Executive shall be afforded (i) an opportunity to respond to the Company during
such ten-business day period and (ii) in the event that the basis for such
termination is clause (iii) or (iv) above, an opportunity to remedy the
situation resulting in the Company's determination to terminate for Cause so
long as such situation is non-repetitive in nature. Upon the termination of
Executive's employment for any reason, Executive shall be entitled to receive
all compensation (including, without limitation, a pro rata portion of the
minimum annual performance bonus, unless such termination is for Cause) for the
then current Contract Year through the date of such termination plus all accrued
but unreimbursed expenses. In addition, upon the termination of Executive's
employment for any reason other than for or by virtue of Cause, death,
Disability or Executive's voluntary termination of employment, the Company shall
continue to be responsible for the payment of all Base Salary Amount and minimum
annual performance bonuses for the remainder of the term hereof; provided,
however, that Executive shall have a duty to mitigate commencing on the first
anniversary of the date of termination; and, further provided that Executive
shall perform her covenants, duties and obligations under Sections 9(b), 9(c)
and 9(d) during the remainder of the term
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hereof. Termination of Executive's employment shall not affect Executive's
ability to exercise stock options that have vested prior to the date of
termination.
8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
developed or perfected by her during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and she will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefor; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on her own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
consultant will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out her duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $16,000 during each full year of the
Consulting Period, payable in equal monthly installments. The
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Company further agrees to reimburse Executive for all reasonable and
necessary business expenses incurred by Executive in the performance of her
consulting services in accordance with the Company's reimbursement policy,
including, without limitation, the submission of supporting evidence as
reasonably required by the Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in or manage entities which sell tickets as an incidental part of their
primary businesses (e.g. cable networks, on-line computer services, sport
teams, arenas, hotels, cruise lines, theatrical and movie productions and
the like) and which do not hold themselves out generally as competitors of
the Company and its subsidiaries and affiliates. The "Ticketmaster
Businesses" shall mean the computerized sale of tickets for sporting,
theatrical, cinematic, live theatrical, musical or any other events on
behalf of various venues and promoters through distribution channels
currently being utilized by the Company or any of its subsidiaries or
affiliates (as such term is defined in Rule 405 of Regulation C promulgated
under the Securities Act of 1933, as amended).
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Ticketmaster Businesses.
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(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees
not to remove any documents, records or other information from the premises of
the Company or any of its subsidiaries or affiliates containing any such
proprietary information, except in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
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(i) If to the Company:
Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chairman of the Board
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Ann Mooney
17211 Rancho Street
Encino, California 91315
Telecopy No.: (818) 990-0799
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to her spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, her spouse. If Executive should die while any amounts would still be
payable to her hereunder if she had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such
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provisions shall be fully severable, the Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from
this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
(f) ENTIRE AGREEMENT. This Agreement (together with any applicable
option agreements pursuant to Section 6(g)) constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an affiliate (as such term is defined in Section 9(b)) of the
Company or to a third party in connection with the merger or consolidation
of the Company with, or the sale of all or substantially all of the assets
or business of the Company to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
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Illinois, applicable to contracts executed in and to be performed entirely
within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State of California is an inconvenient forum or an improper forum based on
lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
TICKETMASTER HOLDINGS GROUP, LTD.
By:
-----------------------------
Title:
--------------------------
-----------------------------------
Ann Mooney
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 1, 1995, between Ticketmaster Group, Inc.,
an Illinois Corporation (the "Company"), and Stuart DePina ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is desirous of employing Executive, and Executive is
desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $200,000 during the first
Contract Year, $220,000 during the second Contract Year, and $240,000
during the third Contract Year.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(c) "CAUSE" shall have the meaning ascribed to that term in
Section 7.
(d) "CONTRACT YEAR" shall mean each year during the term hereof
commencing on February 1 and ending on the immediately following
January 31; provided, however, the first Contract Year shall commence on
November 1, 1995 and end on January 31, 1997.
(e) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(f) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(g) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall commence
on the date hereof and end on January 31, 1999, subject to early termination as
herein provided. The Company and Executive shall negotiate an extension to the
term of this Agreement during the first sixty (60) days of the third Contract
Year.
<PAGE>
4. POSITION AND DUTIES. Executive shall serve as the Vice President and
Treasurer of the Company. He shall report directly to the Company's Chief
Financial Officer. Subject to the authority of the Board of Directors and the
Chief Executive Officer of the Company, the Executive shall have all of the
powers and duties incident to the office of Vice President and such other powers
and duties as may from time to time be prescribed by the Board of Directors or
the Chief Executive Officer of the Company. Executive agrees to serve without
further compensation, if elected or appointed thereto, as an officer or a
director of any of the Company's domestic and foreign subsidiaries and
affiliates. During Executive's employment by the Company, he will be entitled
to indemnification as an officer of the Company (and, if so elected, as an
officer or director of any of the Company's domestic and foreign subsidiaries or
affiliates) in the manner provided by the Illinois Business Corporation Act of
1983, as amended, and the Company's Articles of Incorporation and By-Laws.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote his entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(b), 9(c) and 9(d).
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, he can no longer perform the duties of Vice
President of the Company (a "Disability"), the Company shall only be
obligated to continue to pay the Base Salary Amount to Executive for the
120-day period immediately following the date of Disability (the
"Disability Period"). The right to receive salary payments during the
Disability Period, if applicable, shall survive any termination of
employment by virtue of Disability pursuant to Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive a minimum annual performance bonus in the
amount of $20,000.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by him in the performance of his duties hereunder, provided that
Executive properly accounts
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therefor in accordance with the Company's reimbursement policy,
including, without limitation, the submission of supporting evidence
as reasonably requested by the Company. While traveling on Company
business, Executive shall be entitled to transportation and accommodations
consistent with other executives of the Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled to receive the following benefits (consistent with the general
availability of such benefits to other senior management of the Company):
(i) participation in the Company's standard medical and dental insurance
plans (in accordance with the terms of said plans), (ii) participation in
the Company's ExecuCare insurance plan consistent with participation in
said plan by senior management of the Company, (iii) participation in the
Company's IRS Section 401(k) plan (in accordance with the terms of said
plan) and (iv) life insurance and disability insurance in accordance with
Subsection 6(e) below.
(e) LIFE INSURANCE. The Company agrees to maintain in effect
during the term hereof insurance on Executive's life payable to his estate
or his named beneficiary or beneficiaries in the amount of $750,000;
provided, however, that Executive shall reimburse the Company for any
and all premiums paid by the Company with respect to such insurance
in excess of the preferred or select premium rate for non-smokers. In
addition, so long as Executive is insurable at standard insurable rates
(which rates shall in no event increase during any Contract Year by a
percentage greater than the percentage increase in the consumer price
index for all urban workers (1967=100) over the indexed figure for the
immediately preceding Contract Year, in each case measured as of the month
of February), the Company agrees to also maintain in effect during the
term hereof a disability insurance policy of the type currently maintained
by the Company for other executives of the Company; provided, however,
that in the event Executive is not insurable at such standard insurable
rates, the Company will nevertheless maintain such disability insurance
policy (if available) so long as Executive pays the difference in
premium. Additionally, during the term hereof, Executive shall be
entitled to receive an automobile allowance in the amount of $9000 per
year, payable monthly, in advance.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for executives).
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(g) STOCK OPTIONS. In the event that the Company shall issue its
common stock in an initial public offering during the term hereof, then
Executive shall be entitled to receive such stock options to purchase said
common stock in such amounts and at such values as are determined by the
Chief Executive Officer of the Company, in his sole discretion, taking into
account the issuance of similar options, if any, granted to other
executives of the Company and the term of Executive's employment with the
Company at the time of the offering.
7. TERMINATION. The Company or Executive may terminate the employment
of Executive hereunder upon the occurrence of a Disability (as defined in
Section 6(a)) for a period of no less than 120 days during any consecutive
twelve-month period. The Company may also terminate the employment of
Executive hereunder upon Executive's death or for Cause. For purposes
hereof, "Cause" shall mean (i) fraud, theft, misappropriation of funds or
conviction of a felony, (ii) Executive's engagement in illegal conduct
tending to place Executive or the Company in disrepute, (iii) dereliction or
gross misconduct in Executive's performance of his duties as an employee of
the Company or the failure of Executive to perform his duties in a manner
consistent with the instructions of the Board of Directors or the Chief
Executive Officer of the Company or (iv) violation by Executive of any of his
material covenants contained in this Agreement, including, without
limitation, Section 10. Notwithstanding the foregoing, before the Company
may terminate the employment of Executive for Cause, the Company shall
deliver to Executive not less than ten business days prior written notice of
the Company's intention to terminate Executive's employment together with a
statement of the basis for such termination, and Executive shall be afforded
(i) an opportunity to respond to the Company during such ten-business day
period and (ii) in the event that the basis for such termination is clause
(iii) or (iv) above, and the situation resulting in the Company's
determination to terminate for cause is non-repetitive in nature, the right
to remedy such situation so that such termination is no longer effective.
Upon the termination of Executive's employment for any reason, Executive
shall be entitled to receive all compensation for the then current Contract
Year through the date of such termination plus all accrued but unreimbursed
expenses. In addition, upon the termination of Executive's employment for any
reason other than for or by virtue of Cause, death, disability or Executive's
voluntary termination of employment, the Company shall continue to be
responsible for the payment of the Base Salary Amount for the remainder of
the term hereof; provided, however, that Executive shall have a duty to
mitigate commencing on the first anniversary of the date of termination; and,
further provided that Executive shall perform his covenants, duties and
obligations under Sections 9(b), 9(c) and 9(d) during the remainder of the
term hereof.
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8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
written, developed, or perfected by him during the term hereof, and which relate
to the business of the Company or its subsidiaries or affiliates, shall be the
property of the Company without any interest therein by Executive, and he will,
at the request and expense of the Company, apply for and prosecute letters
patent thereon in the United States or in foreign countries, and any renewals
thereof, if the Company so requests, and will assign and transfer the same to
the Company together with any letters patent, copyrights, trademarks or other
ownership rights therein or applications therefor or renewals thereof and any
revenues or rights to revenues arising therefrom; provided, however, that the
foregoing shall not apply to an invention that Executive develops entirely on
his own time without using the Company's equipment, supplies, facilities or
trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
consultant will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out his duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $10,000 during each full year of the
Consulting Period, payable in equal monthly installments. The Company
further agrees to reimburse Executive for all reasonable and necessary
business expenses incurred by
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Executive in the performance of his consulting services in accordance
with the Company's reimbursement policy, including, without limitation,
the submission of supporting evidence as reasonably required by the
Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in, advise, consult with, be employed by, perform accounting services for
or manage entities which sell tickets as an incidental part of their
primary businesses (e.g. cable networks, on-line computer services, sport
teams, arenas, hotels, cruise lines, theatrical and movie productions and
the like) and which do not hold themselves out generally as competitors of
the Company and its subsidiaries and affiliates. The "Ticketmaster
Businesses" shall mean the computerized sale of tickets for sporting,
theatrical, cinematic, live theatrical, musical or any other events on
behalf of various venues and promoters through distribution channels
currently being utilized by the Company or any of its subsidiaries or
affiliates (as such term is defined in Rule 405 of Regulation C promulgated
under the Securities Act of 1933, as amended).
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Ticketmaster Businesses.
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(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees
not to remove any documents, records or other information from the premises of
the Company or any of its subsidiaries or affiliates containing any such
proprietary information, except in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
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(i) If to the Company:
Ticketmaster Group, Inc.
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chief Executive Officer
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Stuart DePina
7453 W 81st
Los Angeles, California 90045
Telecopy No.: (310) 649-2111
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to his spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, his spouse. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such
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<PAGE>
provisions shall be fully severable, the Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance
from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of
this Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid and
enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an affiliate (as such term is defined in Section 9(b)) of the
Company or to a third party in connection with the merger or consolidation
of the Company with, or the sale of all or substantially all of the assets
or business of the Company to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
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<PAGE>
Illinois, applicable to contracts executed in and to be performed entirely
within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State of California is an inconvenient forum or an improper forum based on
lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
TICKETMASTER GROUP, INC.
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Senior VP/CFO
----------------------------------
/s/ STUART DEPINA
---------------------------------------
STUART DEPINA, an individual
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EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated as of March 1, 1995, between Ticketmaster Corporation,
an Illinois corporation (the "Company"), and Judy A. Black ("Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is desirous of employing Executive, and Executive
is desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby mutually acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $250,000.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(c) "CAUSE" shall have the meaning ascribed to that term in
Section 7.
(d) "CONTRACT YEAR" shall mean each year during the term hereof
commencing on March 1, 1995 and ending on the last day of each February
immediately thereafter.
(e) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(f) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall commence
as of March 1, 1995 and end on the close of business on February 28, 1998,
subject to early termination as herein provided.
4. POSITION AND DUTIES. Executive shall serve as the Senior Vice
President - Governmental Affairs of the Company. She shall report directly to
the Company's Chief Executive Officer and liaise with the Company's General
Counsel. Subject to the authority of the Board of Directors and the Chief
Executive Officer of the Company, the Executive shall have all of the powers
and duties incident to the office of Senior Vice President and such other
<PAGE>
powers and duties as may from time to time be prescribed by the Board of
Directors or the Chief Executive Officer of the Company; provided, however,
that (a) Executive's duties shall relate directly to the field of state and
federal government affairs and public relations commensurate with Executive's
level of experience and (b) Executive shall be officed in the District of
Columbia, the City of Alexandria, Virginia or such other location as shall be
mutually agreed upon by Executive and the Company. Executive agrees to serve
without further compensation, if elected or appointed thereto, as an officer
of any of the Company's domestic and foreign subsidiaries and affiliates.
During Executive's employment by the Company, she will be entitled to
indemnification as an officer of the Company (and, if so elected, as an
officer of any of the Company's domestic and foreign subsidiaries or
affiliates) in the manner provided by the Illinois Business Corporation Act
of 1983, as amended, and the Company's Articles of Incorporation and By-Laws.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote her entire working time, attention and energies to the
business of the Company. Executive may, if approved by the Chief Executive
Officer of the Company, accept appointment to and serve as a member of the
board of directors of other (non-public) corporations not in competition with
the Company; provided, however, that such service shall not unreasonably
interfere with Executive's performance of her duties to the Company hereunder.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's
regular payroll practices with respect to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, she can no longer perform the duties of
Senior Vice President of the Company for a period of 120 days or more
during any consecutive twelve (12) month period (a "Disability"), the
Company shall only be obligated to continue to pay the Base Salary Amount
to Executive for the 120-day period immediately following the date of
Disability (the "Disability Period"). The right to receive salary payments
during the Disability Period, if applicable, shall survive any termination
of employment by virtue of Disability pursuant to Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive such annual performance
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bonus as determined by the Chief Executive Officer, in his sole
discretion.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by her in the performance of her duties hereunder, provided
that Executive properly accounts therefor in accordance with the Company's
reimbursement policy, including, without limitation, the submission of
supporting evidence as reasonably requested by the Company. While
traveling on Company business, Executive shall be entitled to
transportation and accommodations consistent with other senior executives
of the Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled to receive the following benefits at Company's expense: (i)
participation in the Company's standard medical, dental, life and
disability insurance plans (in accordance with the terms of said plans),
(ii) participation in the Company's ExecuCare insurance plan consistent
with participation in said plan by other senior management of the
Company, and (iii) participation in the Company's IRS Section 401(k) plan
(in accordance with the terms of said plan). Additionally, during the term
hereof, Executive shall be entitled to receive an automobile allowance in
the amount of $12,000 per year, payable monthly, in advance.
(e) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for senior management).
(f) STOCK OPTIONS. In the event that the Company shall issue its
common stock in an initial public offering during the term hereof, then
Executive shall be entitled to receive such stock options to purchase said
common stock in such amounts and at such values as are determined by the
Chief Executive Officer of the Company, in his sole discretion, taking into
account the amount of time Executive has been an employee of the Company.
7. TERMINATION.
(a) The Company or Executive may terminate the employment of
Executive hereunder upon the occurrence of a Disability (as defined in Section
6(a)) for a period of no less than 120 days during any consecutive
twelve-month period. The Company may also terminate the employment of
Executive hereunder upon Executive's death or for Cause. For purposes hereof,
"Cause" shall mean (i) fraud, theft, misappropriation of funds or conviction
of a felony, (ii) Executive's engagement in illegal conduct tending to place
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<PAGE>
Executive or the Company in disrepute, (iii) dereliction or gross misconduct
in Executive's performance of her duties as an employee of the Company or the
failure of Executive to perform his duties in a manner consistent with
the instructions of the Board of Directors or the Chief Executive Officer of
the Company or (iv) violation by Executive of any of her material covenants
contained in this Agreement, including, without limitation, Section 9.
Notwithstanding the foregoing, before the Company may terminate the
employment of Executive for Cause, the Company shall deliver to Executive not
less than ten business days prior written notice of the Company's intention
to terminate Executive's employment together with a statement of the basis
for such termination, and Executive shall be afforded (i) an opportunity to
respond to the Company during such ten-business day period and (ii) in the
event that the basis for such termination is clause (iii) or (iv) above, and
the situation resulting in the Company's determination to terminate for cause
is non-repetitive in nature, the right to remedy such situation so that such
termination is no longer effective. Upon the termination of Executive's
employment for any reason, Executive shall be entitled to receive all
compensation for the then current Contract Year through the date of such
termination plus all accrued but unreimbursed expenses. In addition, upon the
termination of Executive's employment for any reason other than for or by
virtue of Cause, death, disability or Executive's voluntary termination of
employment, the Company shall continue to be responsible for the payment of
the Base Salary Amount for the remainder of the term hereof; provided,
however, that any compensation that Executive may receive during this period
shall reduce any amounts owing to Executive by Company hereunder. Termination
of Executive's employment for any reason whatsoever shall not affect
Executive's ability to exercise stock options, if any, that have vested prior
to the date of termination.
(b) Executive may voluntarily terminate her employment solely in the
event she accepts employment with the United States Government. In such
event, she shall provide the Company with reasonable notice of such
occurrence (and the potential for such occurrence) and shall reasonably
assist the Company in any transition to fulfill her prior position and/or
duties. In the event Executive exercises her rights under this Section 7(b),
notwithstanding anything to the contrary above, she will not be entitled to
any of the benefits set forth in Section 7(a) above.
8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
written, developed, or perfected by her during the term hereof, and which
relate to the business of the Company or its subsidiaries or affiliates,
shall be the property of the Company without any interest therein by
Executive, and she will, at the request and expense of the Company, apply for
and prosecute letters patent thereon in the United States or in foreign
countries, and any renewals thereof, if the Company so requests,
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<PAGE>
and will assign and transfer the same to the Company together with any
letters patent, copyrights, trademarks or other ownership rights therein or
applications therefor or renewals thereof and any revenues or rights to
revenues arising therefrom; provided, however, that the foregoing shall not
apply to an invention that Executive develops entirely on her own time
without using the Company's equipment, supplies, facilities or trade secret
information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of
the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONFIDENTIALITY. Executive shall not at any time (during or for
a period of sixty (60) months after termination of employment) disclose
(except as may be required by law) or use, except in the pursuit of the
business of the Company or any of its subsidiaries or affiliates, any
Proprietary Information of the Company. "Proprietary Information of the
Company" means all information known or intended to be know only to employees
of the Company or any of its subsidiaries or affiliates in a confidential
relationship with the Company or any of its subsidiaries or affiliates
relating to technical matters pertaining to the business of the Company or
any of its subsidiaries or affiliates, but shall not include any information
within the public domain. Executive agrees not to remove any documents,
records or other information from the premises of the Company or any of its
subsidiaries or affiliates containing any such proprietary information,
except in the pursuit of the business of the Company or any of its
subsidiaries or affiliates, and acknowledges that such documents, records and
other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
10. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions
contemplated hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be
deemed to have been duly given or made upon receipt) by delivery in
person, by overnight courier service, by cable, by telecopy, by telegram,
by telex or by registered or certified mail to the respective parties
at the
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<PAGE>
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11(b)):
(i) If to the Company:
Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chief Executive Officer
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North La Salle Street
Suite 2200
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-1747
(ii) If to Executive:
Judy A. Black
208 Virginia Avenue
Alexandria, VA 22302
With a copy to:
Joel L. Dahnke
Mayes & Valentine
110 S. Union Street
Alexandria, VA 22314
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and personal
or legal representatives. If Executive is domiciled in a community property
state or a state that has adopted the Uniform Marital Property Act or
equivalent or if Executive is domiciled in a state that grants to her spouse
any other marital rights in Executive's assets (including, without
limitation, dower rights or a right to elect against Executive's will or to
claim a forced share of Executive's estate), this Agreement shall also inure
to the benefit of, and shall also be binding
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<PAGE>
upon, her spouse. If Executive should die while any amounts would still be
payable to her hereunder if she had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to Executive's designee or, if there be no such designee,
to Executive's heirs, devisees, legatees or executors or administrators of
Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully severable,
the Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision
or by its severance from this Agreement. Furthermore, in lieu of such
illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements and understandings, both written
and oral, between the Company and the Executive with respect to the subject
matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an affiliate of the Company or to a third party in connection
with the merger or consolidation of the Company with, or the sale of all or
substantially all of the assets or business of the Company to, that third
party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company and
Executive. Either party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of the other party or (b)
waive compliance with any of the agreements or conditions of the other party
contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in
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<PAGE>
writing signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any party to assert any of
its rights hereunder shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable to
contracts executed in and to be performed entirely within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising directly
or indirectly out of this Agreement which are brought pursuant to judicial
proceedings shall be litigated in a Federal or state court located in the
State of California. The parties hereto expressly submit and consent in
advance to such jurisdiction and agree that service of summons and complaint
or other process or papers may be made by registered or certified mail
addressed to the relevant party at the address to which notices are to be
sent pursuant to Section 10(b) of this Agreement. The parties hereto waive any
claim that a Federal or state court located in the State of California is an
inconvenient forum or an improper forum based on lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Section 9 are reasonable and necessary to protect the legitimate
interests of the Company, that in the absence of such covenants the Company
would not have entered into this Agreement, that any breach or threatened
breach of such covenants will result in irreparable injury to the Company
and that the remedy at law for such breach or threatened breach would be
inadequate. Accordingly, the Executive agrees that the Company, in addition
to any other rights or remedies which it may have, shall be entitled to seek
such equitable and injunctive relief as may be available from any court of
competent jurisdiction to restrain the Executive from any breach or
threatened breach of such convenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in
that action or proceeding, in addition to any other relief to which it may be
entitled.
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(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date and year first written above.
TICKETMASTER CORPORATION
By: /s/
-------------------------------------
Title: S.V.P.
----------------------------------
/s/Judy A. Black
----------------------------------------
JUDY A. BLACK
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of December __, 1994, between Ticketmaster Corporation,
an Illinois Corporation (the "Company"), and Alan Citron ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is desirous of employing Executive, and Executive is
desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $175,000 during the first
Contract Year, $185,000 during the second Contract Year, and $195,000
during the third Contract Year.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(c) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(d) "CONTRACT YEAR" shall mean each year during the term hereof
commencing on December __ and ending on the immediately following December
31; provided, however, the third Contract Year shall end on January 31,
1998, and the Base Salary Amount for the third Contract Year shall be
prorated and paid for the additional period of January 1, 1998 through
January 31, 1998; and, provided further that, to the extent that the first
Contract Year is greater than 365 days, the Base Salary Amount for the
first Contract Year shall be prorated and paid for said additional period,
if any.
(e) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(f) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(g) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
<PAGE>
3. TERM OF EMPLOYMENT. The term of employment hereunder shall commence
on the date hereof and end on January 31, 1998, subject to early termination as
herein provided.
4. POSITION AND DUTIES. Executive shall serve as the Vice President of
Publications and Media Ventures of the Company. He shall report directly to the
Company's Chief Executive Officer and/or the Company's Chief Operating Officer,
at the Company's Chief Executive Officer's discretion. Executive's duties and
responsibilities shall include, but shall not be limited to, (a) managing the
Company's media relations (including, but not limited to, implementation of
media relations and strategies), (b) consulting with the Company's Chief
Executive Officer regarding (i) the Company's public image, (ii) the development
and execution of the Company's publication(s), if any, and (iii) other new forms
of media development and (c) such other duties and responsibilities as the
Company's Chief Executive Officer shall determine in his sole discretion.
Executive's services shall be principally performed from the Company's
headquarter office. Subject to the authority of the Board of Directors and the
Chief Executive Officer of the Company, the Executive shall have all of the
powers and duties incident to the office of Vice President and such other powers
and duties as may from time to time be prescribed by the Board of Directors or
the Chief Executive Officer of the Company. Executive agrees to serve without
further compensation, if elected or appointed thereto, as an officer or a
director of any of the Company's domestic and foreign subsidiaries and
affiliates. During Executive's employment by the Company, he will be entitled
to indemnification as an officer of the Company (and, if so elected, as an
officer or director of any of the Company's domestic and foreign subsidiaries or
affiliates) in the manner provided by the Illinois Business Corporation Act of
1983, as amended, and the Company's Articles of Incorporation and By-Laws.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote his entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(b), 9(c) and 9(d).
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, he can no longer perform the duties of Vice
President of the Company for a period of 120 days or more during any
consecutive twelve (12) month period (a "Disability"), the
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Company shall only be obligated to continue to pay the Base Salary Amount
to Executive for the 120-day period immediately following the date of
Disability (the "Disability Period"). The right to receive salary
payments during the Disability Period, if applicable, shall survive any
termination of employment by virtue of Disability pursuant to Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive such annual performance bonus as determined by
the Chief Executive Officer, in his sole discretion.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by him in the performance of his duties hereunder, provided that
Executive properly accounts therefor in accordance with the Company's
reimbursement policy, including, without limitation, the submission of
supporting evidence as reasonably requested by the Company. While
traveling on Company business, Executive shall be entitled to
transportation and accommodations consistent with other senior executives
of the Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled to receive the following benefits (consistent with the general
availability of such benefits to other senior management of the Company):
(i) participation in the Company's standard medical, dental, life and
disability insurance plans (in accordance with the terms of said plans),
(ii) participation in the company's ExecuCare insurance plan consistent
with participation in said plan by other senior management of the Company,
and (iii) participation in the Company's IRS Section 401(k) plan (in
accordance with the terms of said plan). Additionally, during the term
hereof, Executive shall be entitled to receive an automobile allowance in
the amount of $5000 per year, payable monthly, in advance.
(e) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for senior management).
(f) STOCK OPTIONS. In the event that the Company (or the Company's
parent company) shall issue its common stock in an initial public offering
during the term hereof, then Executive shall be entitled to receive such
stock options to purchase said common stock in such amounts and at such
values as are determined by the Chief Executive Officer of the Company, in
his sole discretion, taking into account the issuance of similar options,
if any, granted to other senior
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management of the Company. In the event that the Company's parent
company issues its common stock in an initial public offering during the
term hereof, the Company shall assign this Agreement to said parent
company.
7. TERMINATION. The Company or Executive may terminate the employment
of Executive hereunder upon the occurrence of a Disability (as defined in
Section 6(a)) for a period of no less than 120 days during any consecutive
twelve-month period. The Company may also terminate the employment of
Executive hereunder upon Executive's death or for Cause. For purposes
hereof, "Cause" shall mean (i) fraud, theft, misappropriation of funds or
conviction of a felony, (ii) Executive's engagement in illegal conduct
tending to place Executive or the Company in disrepute, (iii) dereliction or
gross misconduct in Executive's performance of his duties as an employee of
the Company or the failure of Executive to perform his duties in a manner
consistent with the instructions of the Board of Directors or the Chief
Executive Officer of the Company or (iv) violation by Executive of any of his
material covenants contained in this Agreement, including, without
limitation, Section 10. Notwithstanding the foregoing, before the Company
may terminate the employment of Executive for Cause, the Company shall
deliver to Executive not less than ten business days prior written notice of
the Company's intention to terminate Executive's employment together with a
statement of the basis for such termination, and Executive shall be afforded
(i) an opportunity to respond to the Company during such ten-business day
period and (ii) in the event that the basis for such termination is clause
(iii) or (iv) above, and the situation resulting in the Company's
determination to terminate for cause is non-repetitive in nature, the right
to remedy such situation so that such termination is no longer effective.
Upon the termination of Executive's employment for any reason, Executive
shall be entitled to receive all compensation for the then current Contract
Year through the date of such termination plus all accrued but unreimbursed
expenses. In addition, upon the termination of Executive's employment for any
reason other than for or by virtue of Cause, death, disability or Executive's
voluntary termination of employment, the Company shall continue to be
responsible for the payment of the Base Salary Amount for the remainder of
the term hereof; provided, however, that Executive shall have a duty to
mitigate commencing on the first (yearly) anniversary of the date of
termination; and, further provided that Executive shall perform his
covenants, duties and obligations under Sections 9(b), 9(c) and 9(d) during
the remainder of the term hereof. Termination of Executive's employment for
any reason whatsoever shall not affect Executive's ability to exercise stock
options that have vested prior to the date of termination.
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8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
written, developed, or perfected by him during the term hereof, and which relate
to the business of the Company or its subsidiaries or affiliates, shall be the
property of the Company without any interest therein by Executive, and he will,
at the request and expense of the Company, apply for and prosecute letters
patent thereon in the United States or in foreign countries, and any renewals
thereof, if the Company so requests, and will assign and transfer the same to
the Company together with any letters patent, copyrights, trademarks or other
ownership rights therein or applications therefor or renewals thereof and any
revenues or rights to revenues arising therefrom; provided, however, that the
foregoing shall not apply to an invention that Executive develops entirely on
his own time without using the Company's equipment, supplies, facilities or
trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
consultant will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out his duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $10,000 during each full year of the
Consulting Period, payable in equal monthly installments. The Company
further agrees to reimburse Executive for all
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reasonable and necessary business expenses incurred by Executive in the
performance of his consulting services in accordance with the Company's
reimbursement policy, including, without limitation, the submission of
supporting evidence as reasonably required by the Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in, advise, consult with, be employed by, perform legal services for or
manage entities which sell tickets as an incidental part of their primary
businesses (e.g. cable networks, on-line computer services, sport teams,
arenas, hotels, cruise lines, theatrical and movie productions and the
like) and which do not hold themselves out generally as competitors of the
Company and its subsidiaries and affiliates. The "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical,
cinematic, live theatrical, musical or any other events on behalf of
various venues and promoters through distribution channels currently being
utilized by the Company or any of its subsidiaries or affiliates (as such
term is defined in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended).
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Ticketmaster Businesses.
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(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees
not to remove any documents, records or other information from the premises of
the Company or any of its subsidiaries or affiliates containing any such
proprietary information, except in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
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(i) If to the Company:
Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chief Executive Officer
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Alan Citron
_________________________
_________________________
Telecopy No.: (____) ___________
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to his spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, his spouse. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
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(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an operating affiliate (as such term is defined in Section
9(b)) of the Company or to a third party in connection with the merger or
consolidation of the Company with, or the sale of all or substantially all
of the assets or business of the Company to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
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(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable
to contracts executed in and to be performed entirely within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State of California is an inconvenient forum or an improper forum based on
lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
TICKETMASTER CORPORATION
By: /s/ FREDRIC D. ROSEN
------------------------------------
Title: President
---------------------------------
/s/ ALAN CITRON
---------------------------------------
ALAN CITRON
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 31, 1995, between Ticketmaster- Southern
California, Inc., a California Corporation (the "Company"), and Claire Rothman,
an individual ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is desirous of employing Executive, and Executive is
desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $300,000 during the first
Contract Year, $315,000 during the second Contract Year and $330,000 during
the third Contract Year.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(c) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(d) "COMMON STOCK" shall mean the Common Stock, no par value, of the
Company.
(e) "CONSULTING PERIOD" shall have the meaning ascribed to that term
in Section 9(a).
(f) "CONTRACT YEAR" shall mean each year during the term hereof
commencing on June 1 and ending on the immediately following May 31.
(g) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(h) "DISABILITY" shall have the meaning ascribed to that term in
Section 6(a).
(i) "DISABILITY PERIOD" shall have the meaning ascribed to that term
in Section 6(a).
(j) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(k) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
<PAGE>
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for a
period of three (3) years commencing on June 1, 1995 and ending on May 31, 1998,
subject to early termination as herein provided. Notwithstanding anything to
the contrary hereinabove, Executive may terminate her employment at any time
upon reasonable notice to the Chief Executive Officer of the Company and receive
her Base Salary and minimum Annual Performance Bonus for the lesser of one (1)
year or the time remaining until the scheduled expiration date of this
Agreement. In the event Executive exercises this right, she will not be
required to mitigate any costs to the Company arising therefrom.
4. POSITION AND DUTIES. Executive shall serve as the Vice President
and General Manager of the Western Region of the Company. Additionally, the
Executive shall serve as Senior Vice President of Community Affairs of the
Company pursuant to which she shall oversee all charitable and foundation
activities of the Company and report directly to the Chief Executive Officer
of Ticketmaster Corporation. Subject to the authority of the Board of
Directors and the Chief Executive Officer of the Company, the Executive shall
have all of the powers and duties incident to the office of Vice President
and General Manager of the Western Region and such other powers and duties as
may from time to time be prescribed by the Board of Directors or the Chief
Executive Officer of the Company (consistent with the duties of senior
management of the Company). Executive agrees to serve without further
compensation, if elected or appointed thereto, as an officer or a director of
any of the Company's domestic and foreign subsidiaries and affiliates.
During Executive's employment by the Company, she will be entitled to
indemnification as an officer of the Company (and, if so elected, as an
officer or director of any of the Company's domestic and foreign subsidiaries
or affiliates) in the manner provided by the Illinois Business Corporation
Act of 1983, as amended.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote her entire working time, attention and energies to the
business of the Company and will not take any actions of the kind described in
Sections 9(b), 9(c) and 9(d). Provided, however, Executive may consult with her
immediately preceding employer, from time to time, so long as such consultation
does not interfere with the performance of her duties to the Company.
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's regular
payroll practices with
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respect to senior management compensation. Provided, however, during the
first six (6) months of the first Contract Year hereof, Company shall defer
$110,000 of Executive's Base Salary and establish a "rabbi trust", or
similar entity as agreed upon between the Company and Executive (the
"Trust"), to which such amounts shall be contributed, and during the
remainder of the term of this Agreement, an amount equal to ten percent
(10%) of Executive's Base Salary and Annual Performance Bonuses shall be
contributed by the Company into the Trust.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, she can no longer perform the duties of Vice
President and General Manager of the Western Region of the Company and/or
Senior Vice President Community Affairs of the Company for a period of 120
days or more during any consecutive twelve (12) month period (a
"Disability"), the Company shall only be obligated to continue to pay the
Base Salary Amount to Executive for the 120-day period immediately
following the date of Disability (the "Disability Period"). The right to
receive salary payments during the Disability Period, if applicable, shall
survive any termination of employment by virtue of Disability pursuant to
Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive such annual performance bonus as determined by
the Chief Executive Officer, in his sole discretion, the determination of
which shall be based upon such standards, guidelines and factual
circumstances as the Chief Executive Officer deems relevant, including,
without limitation, the operating results for the Company during such
Contract Year, the importance of the efforts of Executive in achieving such
operating results and the achievement by the Company and/or Executive of
performance goals previously established by the Chief Executive Officer of
the Company for such Contract Year; provided, however, that: in no event
shall the bonus for the first Contract Year of the term hereof be less than
$30,000.00; the bonus for the second Contract Year be less than $35,000;
and the bonus for the third Contract Year be less than $40,000, all with
respect to a full Contract Year or a pro rata portion of the applicable
amount for a partial Contract Year.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
(including dues for memberships in civic organizations) incurred by her in
the performance of her duties hereunder, provided that Executive properly
accounts therefor in accordance with the Company's reimbursement
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policy, including, without limitation, the submission of supporting
evidence as reasonably requested by the Company. While traveling on
Company business, Executive shall be entitled to transportation and
accommodations consistent with other senior executives of the Company
(e.g., first class airfare for trips of more than 1-2 hours).
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled to receive the following benefits (consistent with the general
availability of such benefits to other senior management of the Company):
(i) participation in the Company's standard medical, dental, life and
disability insurance plans (in accordance with the terms of said plans),
(ii) participation in the Company's ExecuCare insurance plan consistent
with participation in said plan by other senior management of the Company,
and (iii) participation in the Company's IRS Section 401(k) plan (in
accordance with the terms of said plan). Additionally, during the term
hereof, Executive shall be entitled to receive an automobile allowance in
the amount of $6300 per year, payable monthly, in advance and reimbursement
for insurance, gasoline and similar documented automobile expenses.
(e) INSURANCE. The Company agrees to maintain in effect during the
term hereof insurance on Executive's life payable to hers estate or hers
named beneficiary or beneficiaries in the amount of $1,000,000; provided,
however, that Executive shall reimburse the Company for any and all
premiums paid by the Company with respect to such insurance in excess of
the preferred or select premium rate for non-smokers. In addition, so long
as Executive is insurable at standard insurable rates (which rates shall in
no event increase during any Contract Year by a percentage greater than the
percentage increase in the consumer price index for all urban workers
(1967=100) over the indexed figure for the immediately preceding Contract
Year, in each case measured as of the month of February), the Company
agrees to also maintain in effect during the term hereof a disability
insurance policy of the type currently maintained by the Company for other
senior executives of the Company; provided, however, that in the event
Executive is not insurable at such standard insurable rates, the Company
will nevertheless maintain such disability insurance policy (if available)
so long as Executive pays the difference in premium.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three (3) weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for senior management).
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(g) STOCK OPTIONS. In the event that the Company shall issue its
Common Stock in an initial public offering during the term hereof, then
Executive shall be entitled to receive such stock options to purchase said
Common Stock in such amounts and at such values as are determined by the
Chief Executive Officer of the Company, in his sole discretion, taking into
account the issuance of similar options, if any, granted to other senior
management of the Company.
7. TERMINATION. The Company or Executive may terminate the employment of
Executive hereunder upon the occurrence of a Disability (as defined in Section
6(a)) for a period of no less than 120 days during any consecutive twelve-month
period. The Company may also terminate the employment of Executive hereunder
upon Executive's death or for Cause. For purposes hereof, "Cause" shall mean
(i) fraud, theft, misappropriation of funds or conviction of a felony, (ii)
Executive's engagement in illegal conduct tending to place Executive or the
Company in disrepute, (iii) dereliction or gross misconduct in Executive's
performance of her duties as an employee of the Company or the failure of
Executive to perform her duties in a manner consistent with the instructions of
the Board of Directors or the Chief Executive Officer of the Company (consistent
with the duties of senior management of the Company) or (iv) violation by
Executive of any of her material covenants contained in this Agreement,
including, without limitation, Section 10. Notwithstanding the foregoing,
before the Company may terminate the employment of Executive for Cause, the
Company shall deliver to Executive not less than ten business days prior written
notice of the Company's intention to terminate Executive's employment together
with a statement of the basis for such termination, and Executive shall be
afforded (i) an opportunity to respond to the Company during such ten-business
day period and (ii) in the event that the basis for such termination is clause
(iii) or (iv) above, and the situation resulting in the Company's determination
to terminate for cause is non-repetitive in nature, the right to remedy such
situation so that such termination is no longer effective. Upon the termination
of Executive's employment by the Company for any reason, Executive shall be
entitled to receive all compensation for the then current Contract Year through
the date of such termination plus all accrued but unreimbursed expenses. In
addition, upon the termination of Executive's employment for any reason other
than for or by virtue of Cause, death, disability or Executive's voluntary
termination of employment, the Company shall continue to be responsible for the
payment of the Base Salary Amount for the remainder of the term hereof;
provided, however, that Executive shall have a duty to mitigate commencing on
the first anniversary of the date of termination; and, further provided that
Executive shall perform her covenants, duties and obligations under Sections
9(b), 9(c) and 9(d) during the remainder of the term hereof. Termination of
Executive's employment for any reason whatsoever shall not affect Executive's
ability to exercise stock options that have vested prior to the date of
termination.
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8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
written, developed, or perfected by her during the term hereof, and which relate
to the business of the Company or its subsidiaries or affiliates, shall be the
property of the Company without any interest therein by Executive, and she will,
at the request and expense of the Company, apply for and prosecute letters
patent thereon in the United States or in foreign countries, and any renewals
thereof, if the Company so requests, and will assign and transfer the same to
the Company together with any letters patent, copyrights, trademarks or other
ownership rights therein or applications therefor or renewals thereof and any
revenues or rights to revenues arising therefrom; provided, however, that the
foregoing shall not apply to an invention that Executive develops entirely on
her own time without using the Company's equipment, supplies, facilities or
trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
consultant will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out her duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties hereunder. In consideration of Executive's consulting services, and
in consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $20,000 during each full year of the
Consulting Period, payable in equal monthly installments. The Company
further agrees to reimburse Executive for all reasonable and necessary
business expenses
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incurred by Executive in the performance of her consulting services in
accordance with the Company's reimbursement policy, including, without
limitation, the submission of supporting evidence as reasonably required by
the Company. Provided, however, in the event that the Executive exercises
her rights to voluntarily terminate this Agreement pursuant to Section 3
hereof, then she shall receive the compensation noted in said Section in
lieu of all compensation set forth in this Section 9.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in, advise, consult with, be employed by or perform management services for
entities which sell tickets as an incidental part of their primary
businesses (e.g. cable networks, on-line computer services, sport teams,
arenas, hotels, cruise lines, theatrical and movie productions and the
like) and which do not hold themselves out generally as competitors of the
Company and its subsidiaries and affiliates. The "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical,
cinematic, live theatrical, musical or any other events on behalf of
various venues and promoters through distribution channels currently being
utilized by the Company or any of its subsidiaries or affiliates (as such
term is defined in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended).
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection
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with the operation of any business which is the same as or similar to any
of the Ticketmaster Businesses.
(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees
not to remove any documents, records or other information from the premises of
the Company or any of its subsidiaries or affiliates containing any such
proprietary information, except in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, and acknowledges that such documents,
records and other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
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(i) If to the Company:
Ticketmaster-Southern California, Inc.
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chief Executive Officer
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Claire Rothman
_________________________
_________________________
Telecopy No.: (____) ___________
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to her spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, her spouse. If Executive should die while any amounts would still be
payable to her hereunder if she had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be
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construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the remaining
provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or
by its severance from this Agreement. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as
part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid
and enforceable.
(f) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an operating affiliate (as such term is defined in Section
9(b)) of the Company or to a third party in connection with the merger or
consolidation of the Company with, or the sale of all or substantially all
of the assets or business of the Company to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable
to contracts executed in and to be performed entirely within that state.
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(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State of California is an inconvenient forum or an improper forum based on
lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
TICKETMASTER-SOUTHERN CALIFORNIA, INC.
By: _____________________________
Title: __________________________
___________________________________
Claire Rothman, an individual
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February __, 1995, by and between Ticketmaster
Publishing, Inc., a Delaware corporation (the "Company"), and Carole Ference
("Executive").
W I T N E S S E T H:
WHEREAS, the Company is desirous of employing Executive, and Executive is
desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $250,000.00 during the first
Contract Year, $250,000.00 during the second Contract Year, and a minimum
of $250,000.00 during the third Contract Year.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(c) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(d) "COMMON STOCK" shall mean the Common Stock, no par value, of the
Company.
(e) "CONSULTING PERIOD" shall have the meaning ascribed to that term
in Section 9(a).
(f) "CONTRACT YEAR" shall mean each year during the term hereof
commencing on March 1 and ending on the immediately following February 28.
(g) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(h) "DISABILITY" shall have the meaning ascribed to that term in
Section 6(a).
(i) "DISABILITY PERIOD" shall have the meaning ascribed to that term
in Section 6(a).
<PAGE>
(j) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(k) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for a
period of three years commencing on the date hereof and ending on the last day
of February, 1998, subject to early termination as herein provided. At any time
after the first anniversary date of the term hereof, Company shall have the
right, at its sole option, to terminate this Agreement with or without cause;
provided, however, in the event that Company exercises said option, other than
pursuant to its rights under Paragraph 7 below, then it shall promptly pay
Executive, in full consideration of said termination (and the release of any and
all rights which may accrue as a result thereof), an amount equal to fifty
percent (50%) of the remaining Base Salary Amount(s) and minimum bonus
amounts(s) which would otherwise become due and owing to Executive during the
remaining term hereof.
4. POSITION AND DUTIES. Executive shall serve as the Publisher of the
Company and as a Vice-President of Ticketmaster Corporation ("TM Corp.").
Subject to the authority of the Board of Directors and the Chief Executive
Officer of the Company, the Executive shall have all of the powers and duties
incident to the office of [Title] and such other powers and duties as may from
time to time be prescribed by the Board of Directors or the Chief Executive
Officer of the Company. Executive agrees to serve without further compensation,
if elected or appointed thereto, as an officer or a director of any of the
Company's domestic and foreign subsidiaries and affiliates. During Executive's
employment by the Company,she will be entitled to indemnification as an officer
of the Company (and, if so elected, as an officer or director of any of the
Company's domestic and foreign subsidiaries or affiliates) in the manner
provided by the Illinois Business Corporation Act of 1983, as amended, the
Company's Articles of Incorporation and By-Laws, as amended.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote her entire working time, attention and energies to the
business of the Company and its subsidiaries and affiliates and will not take
any actions of the kind described in Sections 9(b), 9(c) and 9(d). Executive
shall report directly to the Chief Executive Officer and/or the Chief Operating
Officer of TM Corp.
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6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount for the Third Contract Year shall be determined by the Board of
Directors or its Compensation Committee, in its sole discretion, based upon
similar criteria as that which is set forth below in Subparagraph 6(b) with
respect to the determination of bonuses, and after input from Executive;
provided however, in no event shall such Base Salary Amount be less than
$250,000.00. The Base Salary Amount shall be paid to Executive in
accordance with the Company's regular payroll practices with respect to
senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical advice, she can no longer perform the duties of
Publisher of the Company and/or Vice-President of TM Corp. (a
"Disability"), the Company shall only be obligated to continue to pay the
Base Salary Amount to Executive for the 120-day period immediately
following the date of Disability (the "Disability Period"). The right to
receive salary payments during the Disability Period, if applicable, shall
survive any termination of employment by virtue of Disability pursuant to
Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive an annual performance bonus as determined by
the Board of Directors or its Compensation Committee in its sole
discretion, the determination of which shall be based upon such standards,
guidelines and factual circumstances as the Board of Directors or its
Compensation Committee deems relevant, including, without limitation, the
operating results for the Company during such Contract Year, the importance
of the efforts of Executive in achieving such operating results and the
achievement by the Company and/or Executive of performance goals previously
established by the Board of Directors for such Contract Year; provided,
however, that in no event shall the bonus for any Contract Year of the term
hereof be less than $50,000.00. Executive may request, at any time, to
draw against said minimum bonus and Company shall thereafter comply with
such request by paying Executive said bonus in bi-weekly, pro rata, amounts
concurrently with the payment of Executive's Base Salary Amount.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by her in the performance of her
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duties hereunder, provided that Executive properly accounts therefor in
accordance with the Company's reimbursement policy, including, without
limitation, the submission of supporting evidence as reasonably requested
by the Company. While traveling on Company business, Executive shall be
entitled to transportation and accommodations consistent with other senior
executives of the Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled to receive the following benefits (consistent with the general
availability of such benefits to other senior management of the Company and
TM Corp.): (i) participation in the Company's standard medical, dental,
life and disability insurance plans (in accordance with the terms of said
plans, and subparagraph (e) below), (ii) participation in the Company's
ExecuCare insurance plan consistent with participation in said plan by
other senior management of the Company, and (iii) participation in the
Company's IRS Section 401(k) plan (in accordance with the terms of said
plan). Additionally, during the term hereof, Executive shall be entitled
to receive use of a Company car with applicable auto insurance to be paid
for by the Company and membership(s) in appropriate trade and similar
organization(s).
(e) INSURANCE. The Company agrees to maintain in effect during the
term hereof insurance on Executive's life payable to her estate or her
named beneficiary or beneficiaries in the amount of $1,000,000.00;
provided, however, that Executive shall reimburse the Company for any and
all premiums paid by the Company with respect to such insurance in excess
of the preferred or select premium rate for non-smokers. In addition, so
long as Executive is insurable at standard insurable rates (which rates
shall in no event increase during any Contract Year by a percentage greater
than the percentage increase in the consumer price index for all urban
workers (1967=100) over the indexed figure for the immediately preceding
Contract Year, in each case measured as of the month of February), the
Company agrees to also maintain in effect during the term hereof a
disability insurance policy of the type currently maintained by the Company
for its other senior management. The Company agrees that it will assign
such policies to Executive at the expiration of the term hereof; provided,
that (i) such policies are fully assignable to and assumable by Executive
and (ii) the Company shall not be required to incur any expenses or retain
any liability or obligations with respect to the assignment, assumption or
maintenance of said policies.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three (3) weeks paid
vacation during each
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Contract Year (or such other vacation time as is consistent with the
Company's policy for senior management).
(g) STOCK OPTIONS. In the event that the Company shall issue its
Common Stock in an initial public offering during the term hereof, then
Executive shall be entitled to receive such stock options to purchase said
Common Stock in such amounts and at such values as are determined by the
Chief Executive Officer of the Company, in his sole discretion, taking into
account the issuance of similar options, if any, granted to other senior
management of the Company.
(h) MOVING/LIVING EXPENSES. Company shall reimburse Executive for
reasonable moving expenses incurred by Executive in transferring from New
York to Los Angeles, California. Reimbursement shall be subject to receipt
of appropriate documentation and/or invoices by the Company. Additionally,
for a period equal to the lesser of up to six (6) months after the
commencement of the term hereof or until Executive has rented, leased or
sold her existing residence (or such longer period, if required to rent,
lease or sell said residence, as may be agreed to by and between Executive
and the Chief Executive Officer of the Company) Company shall provide
Executive with a monthly living allowance of $3,500.00.
(i) TM CORP. GUARANTY. TM Corp guarantees the Company's financial
obligations to the Executive set forth in this Section 6.
7. TERMINATION. The Company or Executive may terminate the employment of
Executive hereunder upon the occurrence of a Disability (as defined in Section
6(a)) if such Disability continues for a period of no less than 120 days during
any consecutive twelve-month period. The Company may also terminate the
employment of Executive hereunder upon Executive's death or for Cause. For
purposes hereof, "Cause" shall mean (i) fraud, theft, misappropriation of funds
or conviction of a felony, (ii) Executive's engagement in illegal conduct
tending to place Executive or the Company in disrepute, (iii) dereliction or
gross misconduct in Executive's performance of her duties as an employee of the
Company or the failure of Executive to perform her duties in a manner
consistent with the instructions of the Board of Directors or the Chief
Executive Officer of the Company or (iv) violation by Executive of any of her
material covenants contained in this Agreement, including, without limitation,
Section 10. Notwithstanding the foregoing, before the Company may terminate the
employment of Executive for Cause, the Company shall deliver to Executive not
less than ten business days prior written notice of the Company's intention to
terminate Executive's employment together with a statement of the basis for such
termination, and Executive shall be afforded (i) an opportunity to respond to
the Company during such ten-business day period and (ii) in the event
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that the basis for such termination is clause (iii) or (iv) above, and the
situation resulting in the Company's determination to terminate for cause is
non-repetitive in nature, the right to remedy such situation so that such
termination is no longer effective. Upon the termination of Executive's
employment for any reason, Executive shall be entitled to receive all
compensation (including, without limitation, a pro rata portion of the
minimum annual performance bonus, unless such termination is for Cause) for
the then current Contract Year through the date of such termination plus all
accrued but unreimbursed expenses. In addition, upon the termination of
Executive's employment for any reason other than for or by virtue of Cause,
death, Disability or Executive's voluntary termination of employment, the
Company shall continue to be responsible for the payment of all Base Salary
Amount and minimum annual performance bonuses for the remainder of the term
hereof; provided, however, that Executive shall have a duty to mitigate
commencing on the first anniversary of the date of termination; and, further
provided that Executive shall perform her covenants, duties and obligations
under Sections 9(b), 9(c) and 9(d) during the remainder of the term hereof.
8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
developed or perfected by her during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and she will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefor; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on her own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
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affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
Executive will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During the Consulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out her duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $15,000.00 during each full year of the
Consulting Period, payable in equal monthly installments. The Company
further agrees to reimburse Executive for all reasonable and necessary
business expenses incurred by Executive in the performance of her
consulting services in accordance with the Company's reimbursement policy,
including, without limitation, the submission of supporting evidence as
reasonably required by the Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in, advise, consult with, be employed by, perform services relative to
magazine publishing for or manage entities which sell tickets as an
incidental part of their primary businesses (e.g. cable networks, on-line
computer services, sport teams, arenas, hotels, cruise lines, theatrical
and movie productions and the like) and which do not hold themselves out
generally as competitors of the Company and its subsidiaries and
affiliates. The "Ticketmaster Businesses" shall mean the computerized sale
of tickets for sporting, theatrical, cinematic, live theatrical, musical or
any other events on behalf of various venues and promoters through
distribution channels currently being
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utilized by the Company or any of its subsidiaries or affiliates (as such
term is defined in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended) and any of the other business now, or
hereafter (during the term hereof) conducted by the Company or any of its
subsidiaries or affiliates, including, but not limited to, any or all of
the publications of any of said entities.
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Ticketmaster Businesses.
(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees
not to remove any documents, records or other information from the premises of
the Company (other than personal files and effects) or any of its subsidiaries
or affiliates containing any such proprietary information, except in the pursuit
of the business of the Company or any of its subsidiaries or affiliates, and
acknowledges that such documents, records and other information are the
exclusive property of the Company or its subsidiaries or
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affiliates. Upon termination of Executive's employment, Executive shall
immediately return all Proprietary Information of the Company and all copies
thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
(i) If to the Company:
Ticketmaster Publishing, Inc.
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chairman of the Board
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North La Salle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Carole Ference
______________________________
______________________________
______________________________
Attention: ___________________
Telecopy No.: (___) ___-____
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
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(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to her spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, her spouse. If Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) ENTIRE AGREEMENT. This Agreement (together with the existing
indemnity agreement between Executive and the Company and any applicable
option agreements pursuant to Section 6(g)) constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof
and thereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and Executive with respect to the
subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this
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Agreement or the rights or duties hereunder to an affiliate (as such term
is defined in Section 9(b)) of the Company or to a third party in
connection with the merger or consolidation of the Company with, or the
sale of all or substantially all of the assets or business of the Company
to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable
to contracts executed in and to be performed entirely within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State of California is an inconvenient forum or an improper forum based on
lack of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled
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to seek such equitable and injunctive relief as may be available from any
court of competent jurisdiction to restrain the Executive from any breach
or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
Solely for purposes of
Section 6 (i):
TICKETMASTER CORPORATION TICKETMASTER PUBLISHING, INC.,
By: /s/ Fredric D. Rosen By: /s/ Fredric D. Rosen
---------------------- ---------------------------
Title: President Title: Chairman of Board
------------------- ------------------------
/s/ Carole Ference
-----------------------------------
Carole Ference, an individual
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of January 3, 1995, by and between Ticketmaster
Publishing, Inc., a Delaware corporation (the "Company"), and Annie Gilbar
("Executive").
W I T N E S S E T H:
WHEREAS, the Company is desirous of employing Executive, and Executive is
desirous of being employed by the Company, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. The following terms shall have the indicated meanings
when used in this Agreement, unless the context requires otherwise:
(a) "BASE SALARY AMOUNT" shall mean $200,000.00 during the first
Contract Year, $200,000.00 during the second Contract Year, and a minimum
of $200,000.00 during the third Contract Year.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
(c) "CAUSE" shall have the meaning ascribed to that term in Section
7.
(d) "COMMON STOCK" shall mean the Common Stock, no par value, of the
Company.
(e) "CONSULTING PERIOD" shall have the meaning ascribed to that term
in Section 9(a).
(f) "CONTRACT YEAR" shall mean each year during the term hereof
commencing on January 1 and ending on the immediately following December
31, except the first year of the term hereof which shall commence on
January 3, 1995.
(g) "CUSTOMER" shall have the meaning ascribed to that term in
Section 9(d).
(h) "DISABILITY" shall have the meaning ascribed to that term in
Section 6(a).
(i) "DISABILITY PERIOD" shall have the meaning ascribed to that term
in Section 6(a).
<PAGE>
(j) "PROPRIETARY INFORMATION OF THE COMPANY" shall have the meaning
ascribed to that term in Section 10(a).
(k) "TICKETMASTER BUSINESSES" shall have the meaning ascribed to that
term in Section 9(b).
2. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, on the terms and subject to the
conditions set forth herein.
3. TERM OF EMPLOYMENT. The term of employment hereunder shall be for a
period of three years commencing on the date hereof and ending on the last day
of December 1997, subject to early termination as herein provided.
4. POSITION AND DUTIES. Executive shall serve as the Editor in Chief of
the Company (with full responsibility commensurate with this position) and as a
Vice-President of Ticketmaster Corporation ("TM Corp."). Subject to the
authority of the Board of Directors and the Chief Executive Officer of the
Company, the Executive shall have all of the powers and duties incident to the
office of Editor in Chief and such other powers and duties as may from time to
time be prescribed by the Board of Directors or the Chief Executive Officer of
the Company. Executive agrees to serve without further compensation, if elected
or appointed thereto, as an officer or a director of any of the Company's
domestic and foreign subsidiaries and affiliates. During Executive's employment
by the Company,she will be entitled to indemnification as an officer of the
Company (and, if so elected, as an officer or director of any of the Company's
domestic and foreign subsidiaries or affiliates) in the manner provided by the
Illinois Business Corporation Act of 1983, as amended, the Company's Articles of
Incorporation and By-Laws, as amended.
5. EXCLUSIVE DUTIES. During Executive's employment by the Company,
Executive shall devote her entire working time, attention and energies to the
business of the Company and its subsidiaries and affiliates and will not take
any actions of the kind described in Sections 9(b), 9(c) and 9(d).
6. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During each Contract Year of the term hereof, the
Company shall pay to Executive the Base Salary Amount. The Base Salary
Amount shall be paid to Executive in accordance with the Company's regular
payroll practices with respect to senior management compensation.
In the event that Executive shall become disabled as a result of
bodily injury or physical or mental illness (whether or not occupational)
to such extent that in the sole opinion of the Board of Directors, based
upon competent medical
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advice, she can no longer perform the duties of Editor in Chief of the
Company and/or Vice-President of TM Corp. (a "Disability"), the Company
shall only be obligated to continue to pay the Base Salary Amount to
Executive for the 120-day period immediately following the date of
Disability (the "Disability Period"). The right to receive salary payments
during the Disability Period, if applicable, shall survive any termination
of employment by virtue of Disability pursuant to Section 7.
(b) ANNUAL PERFORMANCE BONUSES. During each Contract Year, the
Company shall pay Executive an annual performance bonus as determined by
the Chief Executive Officer of the Company in his sole discretion, the
determination of which shall be based upon such standards, guidelines and
factual circumstances as the Chief Executive Officer deems relevant,
including, without limitation, the operating results for the Company during
such Contract Year, the importance of the efforts of Executive in achieving
such operating results and the achievement by the Company and/or Executive
of performance goals previously established by the Chief Executive Officer
of the Company for such Contract Year.
(c) EXPENSES. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by her in the performance of her duties hereunder, provided that
Executive properly accounts therefor in accordance with the Company's
reimbursement policy, including, without limitation, the submission of
supporting evidence as reasonably requested by the Company. While
traveling on Company business, Executive shall be entitled to
transportation and accommodations consistent with other senior executives
of the Company.
(d) FRINGE BENEFITS. During the term hereof, Executive shall be
entitled to receive the following benefits (consistent with the general
availability of such benefits to other senior management of the Company and
TM Corp.): (i) participation in the Company's standard medical, dental,
life and disability insurance plans (in accordance with the terms of said
plans, and subparagraph (e) below), (ii) participation in the Company's
ExecuCare insurance plan consistent with participation in said plan by
other senior management of the Company, and (iii) participation in the
Company's IRS Section 401(k) plan (in accordance with the terms of said
plan). Additionally, during the term hereof, Executive shall be entitled
to receive a car allowance in such amount as determined by the Chief
Executive Officer of the Company in his sole discretion.
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<PAGE>
(e) INSURANCE. The Company agrees to maintain in effect during the
term hereof insurance on Executive's life payable to her estate or her
named beneficiary or beneficiaries in the amount of $1,000,000.00;
provided, however, that Executive shall reimburse the Company for any and
all premiums paid by the Company with respect to such insurance in excess
of the preferred or select premium rate for non-smokers. In addition, so
long as Executive is insurable at standard insurable rates (which rates
shall in no event increase during any Contract Year by a percentage greater
than the percentage increase in the consumer price index for all urban
workers (1967=100) over the indexed figure for the immediately preceding
Contract Year, in each case measured as of the month of February), the
Company agrees to also maintain in effect during the term hereof a
disability insurance policy of the type currently maintained by the Company
for its other senior management.
(f) VACATIONS. During the term hereof, Executive shall be entitled
to sick leave and paid holidays consistent with the Company's sick leave
and holiday policy for senior management and up to three (3) weeks paid
vacation during each Contract Year (or such other vacation time as is
consistent with the Company's policy for senior management).
(g) STOCK OPTIONS. In the event that the Company shall issue its
Common Stock in an initial public offering during the term hereof, then
Executive shall be entitled to receive such stock options to purchase said
Common Stock in such amounts and at such values as are determined by the
Chief Executive Officer of the Company, in his sole discretion, taking into
account the issuance of similar options, if any, granted to other senior
management of the Company.
(h) TM CORP. GUARANTY. TM Corp guarantees the Company's financial
obligations to the Executive set forth in this Section 6.
7. TERMINATION. The Company or Executive may terminate the employment of
Executive hereunder upon the occurrence of a Disability (as defined in Section
6(a)) if such Disability continues for a period of no less than 120 days during
any consecutive twelve-month period. The Company may also terminate the
employment of Executive hereunder upon Executive's death or for Cause. For
purposes hereof, "Cause" shall mean (i) fraud, theft, misappropriation of funds
or conviction of a felony, (ii) Executive's engagement in illegal conduct
tending to place Executive or the Company in disrepute, (iii) dereliction or
gross misconduct in Executive's performance of her duties as an employee of the
Company or the failure of Executive to perform her duties in a manner
consistent with the instructions of the Board of Directors or the Chief
Executive Officer of the Company or (iv)
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violation by Executive of any of her material covenants contained in this
Agreement, including, without limitation, Section 10. Notwithstanding the
foregoing, before the Company may terminate the employment of Executive for
Cause, the Company shall deliver to Executive not less than ten business days
prior written notice of the Company's intention to terminate Executive's
employment together with a statement of the basis for such termination, and
Executive shall be afforded (i) an opportunity to respond to the Company
during such ten-business day period and (ii) in the event that the basis for
such termination is clause (iii) or (iv) above, and the situation resulting
in the Company's determination to terminate for cause is non-repetitive in
nature, the right to remedy such situation so that such termination is no
longer effective. Upon the termination of Executive's employment for any
reason, Executive shall be entitled to receive all compensation (including,
without limitation, a pro rata portion of the minimum annual performance
bonus, unless such termination is for Cause) for the then current Contract
Year through the date of such termination plus all accrued but unreimbursed
expenses. In addition, upon the termination of Executive's employment for
any reason other than for or by virtue of Cause, death, Disability or
Executive's voluntary termination of employment, the Company shall continue
to be responsible for the payment of all Base Salary Amount and minimum
annual performance bonuses for the remainder of the term hereof; provided,
however, that Executive shall have a duty to mitigate commencing on the
first anniversary of the date of termination; and, further provided that
Executive shall perform her covenants, duties and obligations under Sections
9(b), 9(c) and 9(d) during the remainder of the term hereof.
8. DEVELOPMENTAL RIGHTS. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
developed or perfected by her during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and she will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefor; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on her own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of the
invention to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
(b) result from any work performed by Executive for the Company.
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9. CONSULTING.
(a) CONSULTING SERVICES. During the two-year period commencing
immediately upon the termination of Executive's employment for any reason
(other than Executive's death) (the "Consulting Period"), Executive shall
be available for consultation with the Company and its subsidiaries and
affiliates concerning their general operations and the industries in which
they engage in business. In addition, during the Consulting Period,
Executive will aid, assist and consult with the Company and its
subsidiaries and affiliates with respect to their dealings with clients and
the enhancement of their recognition and reputation. During theConsulting
Period, Executive shall devote such time and energies to the affairs of the
Company as may be reasonably required to carry out her duties hereunder
without jeopardizing Executive's then full-time, non-Ticketmaster Business
employment opportunities; provided, however, that Executive shall not be
obligated to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $15,000.00 during each full year of the
Consulting Period, payable in equal monthly installments. The Company
further agrees to reimburse Executive for all reasonable and necessary
business expenses incurred by Executive in the performance of her
consulting services in accordance with the Company's reimbursement policy,
including, without limitation, the submission of supporting evidence as
reasonably required by the Company.
(b) COVENANT NOT TO COMPETE. During the Consulting Period, Executive
shall not, without the prior written consent of the Company, directly or
indirectly engage in or assist any activity which is the same as, similar
to or competitive with the Ticketmaster Businesses (other than on behalf of
the Company or any of its subsidiaries or affiliates) including, without
limitation, whether such engagement or assistance is as an officer,
director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative
or other participant, anywhere in the world that the Company or any of its
subsidiaries or affiliates has been engaged, including, without limitation,
the United States, Canada, Mexico, England, Ireland, Scotland, Europe and
Australia. Nothing herein shall limit Executive's ability to own interests
in, advise, consult with, be employed by, perform services relative to
magazine editing for or manage entities which sell tickets as an incidental
part of their primary
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businesses (e.g. cable networks, on-line computer services, sport teams,
arenas, hotels, cruise lines, theatrical and movie productions and the
like) and which do not hold themselves out generally as competitors of the
Company and its subsidiaries and affiliates. The "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical,
cinematic, live theatrical, musical or any other events on behalf of
various venues and promoters through distribution channels currently being
utilized by the Company or any of its subsidiaries or affiliates (as such
term is defined in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended) and any of the other business now, or
hereafter (during the term hereof) conducted by the Company or any of its
subsidiaries or affiliates, including, but not limited to, any or all of
the publications of any of said entities.
(c) SOLICITATION OF EMPLOYEES. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to induce
(regardless of who initiates the contact) any person then employed (whether
part-time or full-time) by the Company or any of its subsidiaries or
affiliates, whether as an officer, employee, consultant, adviser or
independent contractor, to leave the employ of the Company or to cease
providing or otherwise alter the services then provided to the Company or
to any of its subsidiaries or affiliates or (ii) in any other manner seek
to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in
connection with the operation of any business which is the same as or
similar to any of the Ticketmaster Businesses.
(d) NON-SOLICITATION OF CUSTOMERS. During the Consulting Period,
Executive shall not solicit any Customers of the Company or any of its
subsidiaries or affiliates or encourage (regardless of who initiates the
contact) any such Customers to use the facilities or services of any
Competitor of the Company or any of its subsidiaries or affiliates.
"Customer" shall mean any person who engages the Company or any of its
subsidiaries or affiliates to sell, on its behalf as agent, tickets to the
public.
10. CONFIDENTIALITY. Executive shall not at any time (during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business
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of the Company or any of its subsidiaries or affiliates, but shall not
include any information within the public domain. Executive agrees not to
remove any documents, records or other information from the premises of the
Company (other than personal files and effects) or any of its subsidiaries or
affiliates containing any such proprietary information, except in the pursuit
of the business of the Company or any of its subsidiaries or affiliates, and
acknowledges that such documents, records and other information are the
exclusive property of the Company or its subsidiaries or affiliates. Upon
termination of Executive's employment, Executive shall immediately return all
Proprietary Information of the Company and all copies thereof to the Company.
11. GENERAL PROVISIONS.
(a) EXPENSES. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions contemplated
hereby shall be paid by that party.
(b) NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11(b)):
(i) If to the Company:
Ticketmaster Publishing, Inc.
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Attention: Chairman of the Board
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North La Salle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
-8-
<PAGE>
(ii) If to Executive:
Annie Gilbar
316 South Roxbury Drive
Beverly Hills, CA 90212
Attention: Annie Gilbar
Telecopy No.: (310) 843-9521
(c) HEADINGS. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
heirs, devisees, legatees, executors, administrators, successors and
personal or legal representatives. If Executive is domiciled in a
community property state or a state that has adopted the Uniform Marital
Property Act or equivalent or if Executive is domiciled in a state that
grants to her spouse any other marital rights in Executive's assets
(including, without limitation, dower rights or a right to elect against
Executive's will or to claim a forced share of Executive's estate), this
Agreement shall also inure to the benefit of, and shall also be binding
upon, her spouse. If Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under existing or future laws effective
during the term of this Agreement, such provisions shall be fully
severable, the Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain
in full force and effect and shall not be affected by the illegal, invalid
or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid or unenforceable provision,
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(f) ENTIRE AGREEMENT. This Agreement (together with the existing
indemnity agreement between Executive and the Company and any applicable
option agreements pursuant to Section 6(g))
-9-
<PAGE>
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersedes all prior agreements and
understandings, both written and oral, between the Company and Executive
with respect to the subject matter hereof and thereof.
(g) ASSIGNMENT. This Agreement and the rights and duties hereunder
are not assignable by Executive. This Agreement and the rights and duties
hereunder may not be assigned by the Company without the express written
consent of Executive (which consent may be granted or withheld in the sole
discretion of Executive), except that such consent shall not be required in
order for the Company to assign this Agreement or the rights or duties
hereunder to an affiliate (as such term is defined in Section 9(b)) of the
Company or to a third party in connection with the merger or consolidation
of the Company with, or the sale of all or substantially all of the assets
or business of the Company to, that third party.
(h) AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of, the Company
and Executive. Either party to this Agreement may (a) extend the time for
the performance of any of the obligations or other acts of the other party
or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be
bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same
term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
(i) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, applicable
to contracts executed in and to be performed entirely within that state.
(j) JURISDICTION AND VENUE. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant to
judicial proceedings shall be litigated in a Federal or state court located
in the State of California. The parties hereto expressly submit and
consent in advance to such jurisdiction and agree that service of summons
and complaint or other process or papers may be made by registered or
certified mail addressed to the relevant party at the address to which
notices are to be sent pursuant to Section 11(b) of this Agreement. The
parties hereto waive any claim that a Federal or state court located in the
State
-10-
<PAGE>
of California is an inconvenient forum or an improper forum based on lack
of venue.
(k) EQUITABLE RELIEF. Executive acknowledges that the covenants
contained in Sections 9 and 10 are reasonable and necessary to protect the
legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into this Agreement, that any breach or
threatened breach of such covenants will result in irreparable injury to
the Company and that the remedy at law for such breach or threatened breach
would be inadequate. Accordingly, the Executive agrees that the Company,
in addition to any other rights or remedies which it may have, shall be
entitled to seek such equitable and injunctive relief as may be available
from any court of competent jurisdiction to restrain the Executive from any
breach or threatened breach of such covenants.
(l) ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, the prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it
may be entitled.
(m) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original while all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement
as of the date and year first written above.
Solely for purposes of
Section 6 (h):
TICKETMASTER CORPORATION TICKETMASTER PUBLISHING, INC.,
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
--------------------------- ---------------------------
Title: SR. Vice President Title: Editor in Chief
------------------------ ------------------------
-----------------------------------
Annie Gilbar, an individual
<PAGE>
TICKETMASTER HOLDINGS GROUP, LTD.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of December 15, 1993, by and
between TICKETMASTER HOLDINGS GROUP, LTD., an Illinois corporation (the
"Company"),and FREDRIC D. ROSEN ("Employee").
WHEREAS, the Employee is a valued employee of the Company and the Company
wishes to induce him to enter into an employment agreement dated of even date
herewith (the "Employment Agreement") and to encourage him in the performance of
his duties thereunder by granting him an option to purchase shares of Class A
common stock, no par value, of the Company (the "Common Stock").
WHEREAS, the Employee wishes to acquire the right to purchase shares of
Common Stock.
NOW, THEREFORE, for good and valuable consideration, the parties hereto,
intending to be legally bound, hereby agrees as follows:
1. GRANT OF OPTION. Subject to the provisions of Sections 2 and 3
hereof, the Company hereby grants to the Employee the right, privilege and
option to purchase on the terms and conditions hereinafter set forth 3,994,019
shares of the Company's Common Stock at an exercise price of $4.715 per share
plus such amount, if any, determined by dividing 36,699,041 (as adjusted for any
stock dividend, stock split or combination or similar transaction involving the
Company's Common Stock) into any additional capital contribution made by Paul
Allen to the Company pursuant to a letter agreement of even date between the
Company and Paul Allen (the "Option"). The Option is not intended to qualify as
an incentive stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). All provisions of this Agreement are to be
construed in conformity with this intention. Further, in the event that a
subsidiary of the Company, including Ticketmaster Corporation, sells any of its
equity securities to the public pursuant to a registration statement under the
Securities Act of 1933, as amended, other than on Forms S-4 or S-8, prior to the
time the Company sells its equity securities to the public as aforesaid,
Executive shall have the right concurrently with or after the exercise of the
option to receive shares of such Subsidiary's common stock having a value
substantially equal to the value of the Common Stock which the Employee has or
would have received from the Company.
2. TERM. Except as provided in Section 3 hereof, the Option shall be
valid for a term commencing on the date hereof (the "Date of Grant") and ending
10 years from the Date of Grant (the
<PAGE>
"Termination Date"); provided however, that the Option shall terminate in
accordance with the following:
(a) If the Employee's employment by the Company is terminated voluntarily
by the Employee or on account of Disability (as such term is defined in the
Employment Agreement), the Employee may exercise in whole or in part that
portion of the Option which has vested but not yet been exercised as of the date
of such termination at any time prior to the earlier of (i) the Termination
Date, or (ii) six months following such termination. Thereafter, the Option
shall terminate, and the Employee shall have no further rights hereunder.
(b) If the Employee's employment by the Company is terminated by the
Company for Good Reason (as such term is defined in the Employment Agreement),
the Employee may exercise in whole or in part that portion of the Option which
has vested but not yet been exercised as of the date of such termination at any
time prior to the earlier of (i) the Termination Date, or (ii) two years
following such termination. Thereafter, the Option shall terminate, and the
Employee shall have no further rights hereunder.
(c) If the Employee's employment by the Company is terminated by the
Company for Cause (as such term is defined in the Employment Agreement), the
Option shall terminate on the date on which the Employee's employment is
terminated, and the Employee shall have no further rights hereunder.
(d) Following the death of the Employee, any vested portion of the Option
may be exercised by the Employee's personal representative or by the distributee
to whom the Employees' rights under the Option shall pass by will or by the laws
of descent and distribution, at any time prior to the earlier of (i) the
Termination Date or (ii) within six months after the date of Employee's death.
3. VESTING. During the term provided in Section 2, the Option may be
exercised only to the extent that Employee is then vested in such Option. The
Employee shall vest in 25% of the Option as of the date hereof, and shall vest
in the remaining 75% of the Option monthly prorata over a 36 month period
beginning on January 1, 1995 and ending on January 1, 1998.
4. METHOD OF EXERCISE. The Option may be exercised by written notice
(the "Notice"), addressed and delivered to the Company (Attention: Chief
Financial Officer), specifying the number of shares of Common Stock to be
purchased and accompanied by (i) a check, or (ii) that number of shares of
Common Stock which have an aggregate fair market value as of the date of
exercise equal to the exercise price, or (iii) any combination thereof. For
purposes of this Agreement, "fair market value" of a share of Common Stock shall
mean: (i) if the Common Stock is traded on a national stock
-2-
<PAGE>
exchange on the date of exercise of the Option, fair market value shall be the
closing price reported by the applicable composite transactions report on such
day, or if the Common Stock is not traded on such date, the mean between the
closing bid-and-asked prices thereof on that date on such exchange; (ii) if the
Common Stock is traded over-the-counter and is classified as a national market
issue on the date of exercise of the Option, fair market value shall be the last
reported transaction price quoted by the NASDAQ on that day; (iii) if the Common
Stock is traded over-the-counter and is not classified as a national market
issue on the date of exercise of the Option, fair market value shall be the mean
between the last representative bid-and-asked prices quoted by the NASDAQ on
that day; or (iv) if none of the foregoing provisions is applicable, fair market
value as of the date of exercise of the Option shall be determined by the Board
of Directors in good faith on such basis as it deems appropriate. In all cases,
the determination of fair market value shall be binding and conclusive on all
persons.
5. LOAN. Upon written request of the Employee, the Company shall loan
Employee, from time to time, the following amount: (i) the amount necessary to
purchases the number of shares of Common Stock to be acquired upon the exercise
of the Option under Section 4, and (ii) the amount necessary to pay all federal
and state income taxes thereon. The proceeds of each loan shall be utilized
solely for the foregoing purposes. Each such loan shall bear interest at the
minimum rate which would not constitute a "below market loan" as determined
under Section 7872 of the Code. The loan shall be secured by the shares
acquired by exercise of the Option and shall be for a term expiring on the
earliest to occur of (i) the sale by Employee of shares of Common Stock securing
such loan, (ii) two years after termination of employee's employment with the
Company, regardless of cause and (iii) January 31, 1999.
6. DELIVERY OF STOCK CERTIFICATES. The Option shall be deemed to have
been exercised upon receipt by the Company of the Notice (the "Exercise Date").
The certificate representing the shares of Common Stock purchased upon exercise
of the Option shall be issued as of the Exercise Date free and clear of all
liens or encumbrances except any liens in favor of the Company by virtue of
Section 5, and shall (i) either be delivered by the Company to the Employee
within five days following the Exercise Date or as soon thereafter as
practicable or (ii) if a loan has been made pursuant to Section 5, shall be
retained by the Company until the loan is paid in full. As a condition to the
exercise of the Option, the Company may require the Employee to represent and
warrant at the time of any such exercise that the shares of Common Stock are
being purchased for investment purposes only, for the account of the Employee
and without any intention to distribute such shares. If the shares of Common
Stock issuable upon exercise of the Option have not previously been registered
under the Securities Act of 1933, as amended (the "Securities Act"), each
certificate
-3-
<PAGE>
evidencing shares of Common Stock acquired upon exercise of the Option shall
contain on its face, or on the reverse side thereof, the following legend:
"These shares have not been registered under the Securities Act of 1933 or
under any applicable state law. They may not be offered for sale, sold,
transferred, or pledged without (1) registration under the Securities Act
of 1933 and any applicable state law, or (2) an opinion of legal counsel
satisfactory to the Company that registration is not required."
7. SHAREHOLDER APPROVAL. This Agreement is conditioned upon the approval
by the shareholders of the Company within twelve months after the date of this
Agreement in accordance with Rule 16b.3(b) of the Securities Exchange Act of
1934, as it exists now or from time to time may hereafter be amended. If such
shareholder approval is obtained at a duly held shareholder's meeting, it may be
obtained by the affirmative vote of the holders of a majority of the shares of
the Company present at the meeting or represented and entitled to vote thereon.
8. ADJUSTMENT PROVISIONS. If, during the term of this Agreement, there
shall be any stock dividend, stock rights distribution, stock split or
combination, recapitalization, merger, consolidation, sale of assets,
reorganization or other similar change or transaction of or by the Company, an
appropriate adjustment shall be made to the number and kind of shares remaining
to be acquired upon exercise of the Option and to the exercise price of the
Option so that the value to be received by the Employee upon exercise of the
Option shall, in the aggregate, be reasonably equivalent to the value the
Employee would have received if none of the foregoing transactions had occurred.
9. MERGER, CONSOLIDATION OR SALE OF ASSETS. In the event the Company
enters into an agreement providing for (i) the sale of all or substantially all
of the assets of the Company or (ii) a merger, consolidation or reorganization
which would result in the stockholders of the Company immediately prior to such
transaction owning less that 50% of the surviving corporation (a "Change in
Control"),the Option shall become exercisable in full without regard to any
vesting limitations, and the Employee shall be entitled at his election to
either (a) receive in exchange for cancellation of his Option the difference
between the exercise price for such shares and the amount the Employee would
receive if he exercised the Option immediately prior to the transaction and then
received a distribution on such shares or disposed of the shares in the
transaction, or (b) in the case of a merger, consolidation or reorganization,
convert the Option to an option to acquire shares of equivalent value in the
surviving corporation, if the surviving corporation is not the Company. The
Company shall notify Employee at least 10 days prior to any Change in Control.
-4-
<PAGE>
10. WITHHOLDING OBLIGATIONS. In the event that the Company is required to
satisfy withholding obligations under the Code as a result of the exercise of
the Option, the Employee may request that, in lieu of withholding amounts from
the Employee's paycheck or requiring that the Employee deliver a check in the
amount of the withholding obligation, the Company shall withhold that number of
shares of Common Stock which have a fair market value (determined in accordance
with the provisions of Section 4 hereof) on the Exercise Date equal to the
amount required to be withheld.
11. NON-TRANSFERABILITY. The Option is not transferable or assignable by
the Employee other than by will or by the laws of descent and distribution and
are exercisable during the lifetime of the Employee only by the Employee.
12. COMPLIANCE WITH LAW. By accepting the Option, the Employee agrees for
himself and his legal representative that the Company shall not be required to
deliver any shares of Common Stock upon the exercise of the Option until such
shares have been qualified for delivery under applicable securities laws and
regulations as reasonably determined by the Company or its legal counsel.
13. RIGHTS AS A STOCKHOLDER; NOT AN EMPLOYMENT AGREEMENT. The Employee
shall have no rights as a stockholder of the Company with respect to shares of
Common Stock subject to the Option until the Option has been exercised and
payment made as herein provided and certificates representing the shares as to
which the Option has been exercised have been delivered to the Employee or
retained by the Company as security for a loan made pursuant to Section 5.
Nothing contained in this Agreement shall be construed to be a contract of
employment between the Company and the Employee.
14. CONSTRUCTION.
(a) SUCCESSORS. This Agreement and all the terms and provisions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective legal representatives, heirs and successors, except as
expressly herein otherwise provided.
(b) ENTIRE AGREEMENT; MODIFICATION. This Agreement contains the entire
understanding between the parties with respect to the matters referred to herein
and such agreement shall not be modified, except by written instrument signed by
the parties hereto.
(c) HEADINGS; PRONOUNS; GOVERNING LAW. The descriptive headings of the
respective sections and subsections of this Agreement are inserted for
convenience of reference only and shall not be deemed to modify or construe the
provisions which follow them. Any use of any masculine pronoun shall include
the feminine
-5-
<PAGE>
and vice-versa and any use of a singular, the plural and vice-versa, as the
context and facts may require. The construction and interpretation of this
Agreement shall be governed in all respects by the laws of the State of
Illinois.
(d) NOTICES. All communications between the parties shall be in writing
and shall be deemed to have been duly given as of the date and time of hand
delivery or three days after mailing via certified or registered mail, return
receipt requested, proper postage prepaid to the following or such other
addresses of which the parties shall from time to time notify one another:
If to the Company: Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
Los Angeles, California 90010
If to the Employee: Fredric D. Rosen
3701 Wilshire Boulevard
Los Angeles, California 90010
(e) SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application
thereof to any party or circumstance shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the minimal extent of
such provision or the remaining provisions of this Agreement or the application
of such provision to other parties or circumstances.
IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement as of the date first above written.
TICKETMASTER HOLDINGS GROUP, LTD.
By:
-------------------------------
Title:
--------------------------
EMPLOYEE:
-----------------------------------
FREDRIC C. ROSEN
-6-
<PAGE>
TICKETMASTER
401(k) SAVINGS PLAN
PLAN AND TRUST AGREEMENT
AS AMENDED AND RESTATED
EFFECTIVE OCTOBER 1, 1994
<PAGE>
Ticketmaster 401(k) Savings Plan and Trust
As Amended and Restated Effective October 1, 1994
Ticketmaster Corporation previously established the Ticketmaster Corporation
Investment Savings Plan as renamed the Ticketmaster 401(k) Savings Plan
effective October 1, 1994, for the benefit of eligible employees of the Company
and its participating affiliates. The Plan is intended to constitute a
qualified profit sharing plan, as described in Code section 401(a), which
includes a qualified cash or deferred arrangement, as described in Code section
401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Ticketmaster Corporation
and Wells Fargo Bank, National Association. The Trust is intended to be tax
exempt as described under Code section 501(a).
The Plan constitutes an amendment and restatement of the Ticketmaster
Corporation Investment Savings Plan as renamed the Ticketmaster 401(k) Savings
Plan effective October 1, 1994, which was originally established effective as of
January 1, 1990, and its related trust agreement.
The Ticketmaster 401(k) Savings Plan and Trust, as set forth in this document,
is hereby amended and restated effective as of October 1, 1994.
Date: , 19 Ticketmaster Corporation
---------------------- ---
By:
-------------------------------------
Title:
-------------------------------
The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: , 19 Wells Fargo Bank, National Association
------------------------ ---
By:
--------------------------------------
Title:
--------------------------------
Date: , 19 Wells Fargo Bank, National Association
------------------------ ----
By:
--------------------------------------
Title:
--------------------------------
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<PAGE>
TABLE OF CONTENTS
1 DEFINITIONS.............................................................. 1
2 ELIGIBILITY.............................................................. 8
2.1 Eligibility........................................................ 8
2.2 Ineligible Employees............................................... 8
2.3 Ineligible or Former Participants.................................. 8
3 PARTICIPANT CONTRIBUTIONS................................................ 9
3.1 Employee Contribution Election..................................... 9
3.2 Changing a Contribution Election................................... 9
3.3 Revoking and Resuming a Contribution Election...................... 9
3.4 Contribution Percentage Limits..................................... 9
3.5 Refunds When Contribution Dollar Limit Exceeded.................... 10
3.6 Timing, Posting and Tax Considerations............................. 10
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS..................................... 11
4.1 Rollovers.......................................................... 11
4.2 Transfers From Other Qualified Plans............................... 11
5 EMPLOYER CONTRIBUTIONS................................................... 12
5.1 Company Match Contributions........................................ 12
6 ACCOUNTING............................................................... 13
6.1 Individual Participant Accounting.................................. 13
6.2 Sweep Account is Transaction Account............................... 13
6.3 Trade Date Accounting and Investment Cycle......................... 13
6.4 Accounting for Investment Funds.................................... 13
6.5 Payment of Fees and Expenses....................................... 13
6.6 Accounting for Participant Loans................................... 14
6.7 Error Correction................................................... 14
6.8 Participant Statements............................................. 15
6.9 Special Accounting During Conversion Period........................ 15
6.10 Accounts for QDRO Beneficiaries.................................... 15
7 INVESTMENT FUNDS AND ELECTIONS........................................... 16
7.1 Investment Funds................................................... 16
7.2 Investment Fund Elections.......................................... 16
7.3 Responsibility for Investment Choice............................... 16
7.4 Default if No Election............................................. 16
7.5 Timing............................................................. 17
7.6 Investment Fund Election Change Fees............................... 17
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8 VESTING & FORFEITURES.................................................... 18
8.1 Fully Vested Contribution Accounts................................. 18
8.2 Full Vesting upon Certain Events................................... 18
8.3 Vesting Schedule................................................... 18
8.4 Forfeitures........................................................ 18
8.5 Rehired Employees.................................................. 19
9 PARTICIPANT LOANS........................................................ 20
9.1 Participant Loans Permitted........................................ 20
9.2 Loan Application, Note and Security................................ 20
9.3 Spousal Consent.................................................... 20
9.4 Loan Approval...................................................... 20
9.5 Loan Funding Limits................................................ 20
9.6 Maximum Number of Loans............................................ 21
9.7 Source and Timing of Loan Funding.................................. 21
9.8 Interest Rate...................................................... 21
9.9 Repayment.......................................................... 21
9.10 Repayment Hierarchy................................................ 22
9.11 Repayment Suspension............................................... 22
9.12 Loan Default....................................................... 22
9.13 Call Feature....................................................... 22
10 IN-SERVICE WITHDRAWALS................................................... 23
10.1 In-Service Withdrawals Permitted................................... 23
10.2 In-Service Withdrawal Application and Notice....................... 23
10.3 Spousal Consent.................................................... 23
10.4 In-Service Withdrawal Approval..................................... 23
10.5 Minimum Amount, Payment Form and Medium............................ 23
10.6 Source and Timing of In-Service Withdrawal Funding................. 24
10.7 Hardship Withdrawals............................................... 24
10.8 Rollover Account Withdrawals....................................... 25
10.9 Over Age 59 1/2 Withdrawals........................................ 26
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW................. 27
11.1 Benefit Information, Notices and Election.......................... 27
11.2 Spousal Consent.................................................... 27
11.3 Payment Form and Medium............................................ 27
11.4 Distribution of Small Amounts...................................... 28
11.5 Source and Timing of Distribution Funding.......................... 28
11.6 Deemed Distribution................................................ 28
11.7 Latest Commencement Permitted...................................... 28
11.8 Payment Within Life Expectancy..................................... 29
11.9 Incidental Benefit Rule............................................ 29
11.10 Payment to Beneficiary............................................. 29
11.11 Beneficiary Designation............................................ 29
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12 ADP AND ACP TESTS........................................................ 31
12.1 Contribution Limitation Definitions................................ 31
12.2 ADP and ACP Tests.................................................. 33
12.3 Correction of ADP and ACP Tests.................................... 34
12.4 Multiple Use Test.................................................. 35
12.5 Correction of Multiple Use Test.................................... 35
12.6 Adjustment for Investment Gain or Loss............................. 35
12.7 Testing Responsibilities and Required Records...................... 35
12.8 Separate Testing................................................... 35
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS............................. 37
13.1 "Annual Addition" Defined.......................................... 37
13.2 Maximum Annual Addition............................................ 37
13.3 Avoiding an Excess Annual Addition................................. 37
13.4 Correcting an Excess Annual Addition............................... 37
13.5 Correcting a Multiple Plan Excess.................................. 38
13.6 "Defined Benefit Fraction" Defined................................. 38
13.7 "Defined Contribution Fraction" Defined............................ 38
13.8 Combined Plan Limits and Correction................................ 38
14 TOP HEAVY RULES.......................................................... 39
14.1 Top Heavy Definitions.............................................. 39
14.2 Special Contributions.............................................. 40
14.3 Adjustment to Combined Limits for Different Plans.................. 41
15 PLAN ADMINISTRATION...................................................... 42
15.1 Plan Delineates Authority and Responsibility....................... 42
15.2 Fiduciary Standards................................................ 42
15.3 Company is ERISA Plan Administrator................................ 42
15.4 Administrator Duties............................................... 43
15.5 Advisors May be Retained........................................... 43
15.6 Delegation of Administrator Duties................................. 44
15.7 Committee Operating Rules.......................................... 44
16 MANAGEMENT OF INVESTMENTS................................................ 45
16.1 Trust Agreement.................................................... 45
16.2 Investment Funds................................................... 45
16.3 Authority to Hold Cash............................................. 45
16.4 Trustee to Act Upon Instructions................................... 46
16.5 Administrator Has Right to Vote Registered Investment
Company Shares..................................................... 46
16.6 Custom Fund Investment Management.................................. 46
16.7 Authority to Segregate Assets...................................... 47
17 TRUST ADMINISTRATION..................................................... 48
17.1 Trustee to Construe Trust.......................................... 48
17.2 Trustee To Act As Owner of Trust Assets............................ 48
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17.3 United States Indicia of Ownership................................. 48
17.4 Tax Withholding and Payment........................................ 49
17.5 Trust Accounting................................................... 49
17.6 Valuation of Certain Assets........................................ 49
17.7 Legal Counsel...................................................... 50
17.8 Fees and Expenses.................................................. 50
17.9 Trustee Duties and Limitations..................................... 50
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION........................ 51
18.1 Plan Does Not Affect Employment Rights............................. 51
18.2 Limited Return of Contributions.................................... 51
18.3 Assignment and Alienation.......................................... 51
18.4 Facility of Payment................................................ 52
18.5 Reallocation of Lost Participant's Accounts........................ 52
18.6 Claims Procedure................................................... 52
18.7 Construction....................................................... 53
18.8 Jurisdiction and Severability...................................... 53
18.9 Indemnification by Employer........................................ 53
19 AMENDMENT, MERGER AND TERMINATION........................................ 54
19.1 Amendment.......................................................... 54
19.2 Merger............................................................. 54
19.3 Plan Termination................................................... 54
19.4 Amendment and Termination Procedures............................... 55
19.5 Termination of Employer's Participation............................ 55
19.6 Replacement of the Trustee......................................... 56
19.7 Final Settlement and Accounting of Trustee......................... 56
APPENDIX A - INVESTMENT FUNDS................................................ 57
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES............................... 58
APPENDIX C - LOAN INTEREST RATE.............................................. 59
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1 DEFINITIONS
When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting for a
Participant's interest in the Plan. "Account" may refer to one or all
of the following accounts which have been created on behalf of a
Participant to hold specific types of Contributions under the Plan:
(a) "Employee Basic Account". An account created to hold Employee
Contributions that are eligible for Company Match Contributions.
(b) "Employee Supplemental Account". An account created to hold
Employee Contributions that are not eligible for Company Match
Contributions.
(c) "Rollover Account". An account created to hold Rollover
Contributions.
(d) "Company Match Account". An account created to hold Company
Match Contributions.
1.2 "ACP" or "Average Contribution Percentage". The percentage calculated
in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a portion of
the duties of the Administrator under the Plan to a Committee in
accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated in
accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to receive benefits after
the death of the Participant pursuant to the "Beneficiary Designation"
paragraph in Section 11, or as a result of a QDRO.
1.6 "Break in Service". The end of five consecutive Plan Years (or six
consecutive Plan Years if absence from employment was due to a
Parental Leave) for which a Participant is credited with no Hours of
Service.
1.7 "Code". The Internal Revenue Code of 1986, as amended. Reference to
any specific Code section shall include such section, any valid
regulation promulgated thereunder, and any comparable provision of any
future legislation amending, supplementing or superseding such
section.
1.8 "Committee". If applicable, the committee which has been appointed by
the Company to administer the Plan in accordance with Section 15.6.
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1.9 "Company". Ticketmaster Corporation or any successor by merger,
purchase or otherwise.
1.10 "Compensation". The sum of a Participant's Taxable Income and salary
reductions, if any, pursuant to Code sections 125, 402(e)(3), 402(h),
403(b), 414(h)(2) or 457, but excluding reimbursements or other
expense allowances, cash and non-cash fringe benefits, moving
expenses, deferred compensation and welfare benefits.
For purposes of determining benefits under this Plan, Compensation is
limited to $150,000 (as indexed for the cost of living pursuant to
Code sections 401(a)(17) and 415(d)) per Plan Year. For purposes of
the preceding sentence, in the case of an HCE who is a 5% Owner or one
of the 10 most highly compensated Employees, (i) such HCE and such
HCE's family group (as defined below) shall be treated as a single
employee and the Compensation of each family group member shall be
aggregated with the Compensation of such HCE, and (ii) the limitation
on Compensation shall be allocated among such HCE and his or her
family group members in proportion to each individual's Compensation
before the application of this sentence. For purposes of this
Section, the term "family group" shall mean an Employee's spouse and
lineal descendants who have not attained age 19 before the close of
the year in question.
For the purpose of determining HCEs and key employees, Compensation
for the entire Plan Year shall be used. For the purpose of
determining ADP and ACP, Compensation shall be limited to amounts paid
to an Eligible Employee while a Participant.
1.11 "Contribution". An amount contributed to the Plan by the Employer or
an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific types
of contribution include:
(a) "Employee Contribution". An amount contributed by the Employer
on an eligible Participant's behalf in conjunction with a
Participant's Code section 401(k) salary deferral election.
(b) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's qualified plan.
(c) "Company Match Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
1.12 "Contribution Dollar Limit". The annual limit placed on each
Participant's Employee Contributions, which shall be $7,000 per
calendar year (as indexed for the cost of living pursuant to Code
sections 402(g)(5) and 415(d)). For purposes of this Section, a
Participant's Employee Contributions shall include (i) any employer
contribution made under any qualified cash or deferred arrangement as
defined in Code section 401(k) to the extent not includible in
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gross income for the taxable year under Code section 402(e)(3) or
402(h)(1)(B) (determined without regard to Code section 402(g)), and
(ii) any employer contribution to purchase an annuity contract under
Code section 403(b) under a salary reduction agreement (within the
meaning of Code section 3121(a)(5)(D)).
1.13 "Direct Rollover". A payment from the Plan to an Eligible Retirement
Plan specified by a Distributee.
1.14 "Disability". A Participant's total and permanent, mental or physical
disability resulting in termination of employment as evidenced by
presentation of medical evidence satisfactory to the Administrator.
1.15 "Distributee". An Employee or former Employee, the surviving spouse
of an Employee or former Employee and a spouse or former spouse of an
Employee or former Employee determined to be an alternate payee under
a QDRO.
1.16 "Effective Date". October 1, 1994, unless stated otherwise. The date
upon which the provisions of this document become effective. In
general, the provisions of this document only apply to Participants
who are Employees on or after the Effective Date. However, investment
and distribution provisions apply to all Participants with Account
balances to be invested or distributed after the Effective Date.
1.17 "Eligible Employee". An Employee of an Employer, except any Employee:
(a) whose compensation and conditions of employment are covered by a
collective bargaining agreement to which an Employer is a party
unless the agreement calls for the Employee's participation in
the Plan; or
(b) who is treated as an Employee because he or she is a Leased
Employee.
1.18 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section 401(a),
that accepts a Distributee's Eligible Rollover Distribution, except
that with regard to an Eligible Rollover Distribution to a surviving
spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
1.19 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding a
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or
life expectancy) of a Distributee or the joint lives (or joint life
expectancies) of a Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; a
distribution to the extent such distribution is required under Code
section 401(a)(9); and the portion of a distribution that is not
includible in gross income (determined
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without regard to the exclusion for net unrealized appreciation with
respect to Employer securities).
1.20 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any income
for such employment is subject to withholding of income or social
security taxes, or
(b) a Leased Employee.
1.21 "Employer". The Company and any Subsidiary or other Related Company
of either the Company or a Subsidiary which adopts this Plan with the
approval of the Company.
1.22 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending, supplementing
or superseding such section.
1.23 "Forfeiture Account". An account holding amounts forfeited by
Participants who have left the Employer, invested in interest bearing
deposits of the Trustee, pending disposition as provided in this Plan
and Trust and as directed by the Administrator.
1.24 "HCE" or "Highly Compensated Employee". An Employee described as a
Highly Compensated Employee in Section 12.
1.25 "Hour of Service". Each hour for which an Employee is entitled to:
(a) payment for the performance of duties for any Related Company;
(b) payment from any Related Company for any period during which no
duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, sickness,
incapacity (including disability), layoff, leave of absence, jury
duty or military service;
(c) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be
credited to the period to which the agreement pertains); or
(d) no payment, but is on a Leave of Absence (and these hours shall
be based upon his or her normally scheduled hours per week or a
40 hour week if there is no regular schedule).
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The crediting of hours for which no duties are performed shall be in
accordance with Department of Labor regulation sections 2530.200b-2(b)
and (c). Actual hours shall be used whenever an accurate record of
hours are maintained for an Employee. Otherwise, an equivalent number
of hours shall be credited for each payroll period in which the
Employee would be credited with at least 1 hour. The payroll period
equivalencies are 45 hours weekly, 90 hours biweekly, 95 hours
semimonthly and 190 hours monthly.
Hours credited prior to a Break in Service are included.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Hours of Service
for eligibility and/or vesting purposes if (1) the Company directs
that credit for such service be granted, or (2) a qualified plan of
the predecessor or acquired company is subsequently maintained by any
Employer or Related Company.
1.26 "Ineligible". The Plan status of an individual during the period in
which he or she is (1) an Employee of a Related Company which is not
then an Employer, (2) an Employee, but not an Eligible Employee, or
(3) not an Employee.
1.27 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the Administrator to
be offered as of the Effective Date to Participants and Beneficiaries
are as set forth in Appendix A.
1.28 "Leased Employee". An individual who is deemed to be an employee of
any Related Company as provided in Code section 414(n) or (o).
1.29 "Leave of Absence". A period during which an individual is deemed to
be an Employee, but is absent from active employment, provided that
the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed forces and
the individual returns to active employment within the period
during which he or she retains employment rights under federal
law.
1.30 "NHCE" or "Non-Highly Compensated Employee". An Employee described as
a Non-Highly Compensated Employee in Section 12.
1.31 "Normal Retirement Date". The date of a Participant's 55th birthday.
1.32 "Owner". A person with an ownership interest in the capital, profits,
outstanding stock or voting power of a Related Company within the
meaning of Code section 318 or 416 (which exclude indirect ownership
through a qualified plan).
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1.33 "Parental Leave". The period of absence from work by reason of
pregnancy, the birth of an Employee's child, the placement of a child
with the Employee in connection with the child's adoption, or caring
for such child immediately after birth or placement as described in
Code section 410(a)(5)(E).
1.34 "Participant". An Eligible Employee who begins to participate in the
Plan after completing the eligibility requirements as described in
Section 2.1. An Eligible Employee who makes a Rollover Contribution
prior to completing the eligibility requirements as described in
Section 2.1 shall also be considered a Participant except for purposes
of provisions related to Contributions (other than a Rollover
Contribution). A Participant's participation continues until his or
her employment with all Related Companies ends and his or her Account
is distributed or forfeited.
1.35 "Pay". All cash compensation, excluding bonuses, paid to an Eligible
Employee by an Employer while a Participant during the current period.
Pay excludes reimbursements or other expense allowances, cash and non-
cash fringe benefits, moving expenses, deferred compensation and
welfare benefits.
Pay is neither increased nor decreased by any salary credit or
reduction pursuant to Code sections 125 or 402(e)(3). Pay is limited
to $150,000 (as indexed for the cost of living pursuant to Code
sections 401(a)(17) and 415(d)) per Plan Year.
1.36 "Plan". The Ticketmaster 401(k) Savings Plan set forth in this
document, as from time to time amended.
1.37 "Plan Year". The annual accounting period of the Plan and Trust which
ends on each December 31.
1.38 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.39 "Related Company". With respect to any Employer, that Employer and
any corporation, trade or business which is, together with that
Employer, a member of the same controlled group of corporations, a
trade or business under common control, or an affiliated service group
within the meaning of Code section 414(b), (c), (m) or (o).
1.40 "Settlement Date". For each Trade Date, the Trustee's next business
day.
1.41 "Spousal Consent". The written consent given by a spouse to a
Participant's election or waiver of a specified form of benefit,
including a loan or in-service withdrawal, or Beneficiary designation.
The spouse's consent must acknowledge the effect on the spouse of the
Participant's election, waiver or designation and be duly witnessed by
a notary public. Spousal Consent shall
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be valid only with respect to the spouse who signs the Spousal Consent
and only for the particular choice made by the Participant which
requires Spousal Consent. A Participant may revoke (without Spousal
Consent) a prior election, waiver or designation that required Spousal
Consent at any time before payments begin. Spousal Consent also means
a determination by the Administrator that there is no spouse, the
spouse cannot be located, or such other circumstances as may be
established by applicable law.
1.42 "Subsidiary". A company which is 50% or more owned, directly or
indirectly, by the Company.
1.43 "Sweep Account". The subsidiary Account for each Participant through
which all transactions are processed, which is invested in interest
bearing deposits of the Trustee.
1.44 "Sweep Date". The cut off date and time for receiving instructions
for transactions to be processed on the next Trade Date.
1.45 "Taxable Income". Compensation in the amount reported by the Employer
as "Wages, tips, other compensation" on Form W-2, or any successor
method of reporting under Code section 6041(d).
1.46 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Funds are traded.
1.47 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan
and holds the Plan assets which are comprised of the aggregate of
Participants' Accounts, any unallocated funds invested in deposit or
money market type assets pending allocation to Participants' Accounts
or disbursement to pay Plan fees and expenses and the Forfeiture
Account.
1.48 "Trustee". Wells Fargo Bank, National Association.
1.49 "Year of Vesting Service". A 12 consecutive month period ending on
the last day of a Plan Year in which an Employee is credited with at
least 1,000 hours of service.
Years of Vesting Service shall include service credited prior to
January 1, 1990.
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2 ELIGIBILITY
2.1 Eligibility
All Participants as of October 1, 1994 shall continue their
eligibility to participate. Each other Eligible Employee shall become
a Participant on the first January 1, April 1, July 1 or October 1
after the date he or she attains age 21 completes a 12 month
eligibility period in which he or she is credited with at least 1,000
Hours of Service. The initial eligibility period begins on the date
an Employee first performs an Hour of Service. Subsequent eligibility
periods begin with the start of each Plan Year beginning after the
first Hour of Service is performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but is
Ineligible at the time participation would otherwise begin (if he or
she were not Ineligible), he or she shall become a Participant on the
first subsequent date on which he or she is an Eligible Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions, nor
generally be eligible for a new Plan loan, during the period he or she
is Ineligible, but he or she shall continue to participate for all
other purposes. An Ineligible Participant or former Participant shall
automatically become an active Participant on the date he or she again
becomes an Eligible Employee.
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3 PARTICIPANT CONTRIBUTIONS
3.1 Employee Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to reduce
his or her Pay by an amount which does not exceed the Contribution
Dollar Limit, within the limits described in the Contribution
Percentage Limits paragraph of this Section 3, and have such amount
contributed to the Plan by the Employer as an Employee Contribution.
The election shall be made as a whole percentage of Pay in such manner
and with such advance notice as prescribed by the Administrator. In
no event shall an Employee's Employee Contributions under the Plan
and comparable contributions to all other plans, contracts or
arrangements of all Related Companies exceed the Contribution Dollar
Limit for the Employee's taxable year beginning in the Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Employee Contribution election as of any January 1, April 1, July 1
or October 1 in such manner and with such advance notice as prescribed
by the Administrator, and such election shall be effective with the
first payroll paid after such date. Participants' Contribution
election percentages shall automatically apply to Pay increases or
decreases.
3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at any time
in such manner and with such advance notice as prescribed by the
Administrator, and such election shall be effective with the first
payroll paid after such date.
A Participant may resume Contributions by making a new Contribution
election at the same time in which a Participant may change his or her
election in such manner and with such advance notice as prescribed by
the Administrator, and such election shall be effective with the first
payroll paid after such date.
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending this Plan and Trust
document, the minimum, if applicable, and maximum Employee
Contribution percentages, prospectively or retrospectively (for the
current Plan Year), for all Participants. In addition, the
Administrator may establish any lower percentage limits for Highly
Compensated Employees as it deems necessary. As of the Effective
Date, the Employee Contribution maximum percentage is 12%.
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Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event shall the
contributions made by or on behalf of a Participant for a Plan Year
exceed the maximum allowable under Code section 415.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Employee Contributions for a calendar year to
this Plan and comparable contributions to any other qualified defined
contribution plan in excess of the Contribution Dollar Limit may
notify the Administrator in writing by the following March 1 (or as
late as April 14 if allowed by the Administrator) that an excess has
occurred. In this event, the amount of the excess specified by the
Participant, adjusted for investment gain or loss, shall be refunded
to him or her by April 15 and shall not be included as an Annual
Addition under Code section 415 for the year contributed. Refunds
shall not include investment gain or loss for the period between the
end of the applicable Plan Year and the date of distribution. Any
Company Match Contributions attributable to refunded excess Employee
Contributions as described in this Section shall be deemed a
Contribution made by reason of a mistake of fact and removed from the
Participant's Account.
3.6 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions, may
only be made through payroll deduction. Such amounts shall be paid to
the Trustee in cash and posted to each Participant's Account(s) as
soon as such amounts can reasonably be separated from the Employer's
general assets and balanced against the specific amount made on behalf
of each Participant. In no event, however, shall such amounts be paid
to the Trustee more than 90 days after the date amounts are deducted
from a Participant's Pay. Employee Contributions shall be treated as
Employer Contributions in determining tax deductions under Code
section 404(a).
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4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS
4.1 Rollovers
The Administrator may authorize the Trustee to accept a rollover
contribution in cash, within the meaning of Code section 402(c) or
408(d)(3)(A)(ii), directly from an Eligible Employee or as a Direct
Rollover from another qualified plan on behalf of the Eligible
Employee, even if he or she is not yet a Participant. The Employee
shall be responsible for furnishing satisfactory evidence, in such
manner as prescribed by the Administrator, that the amount is eligible
for rollover treatment. A rollover contribution received directly
from an Eligible Employee must be paid to the Trustee in cash within
60 days after the date received by the Eligible Employee from a
qualified plan or conduit individual retirement account.
Contributions described in this paragraph shall be posted to the
applicable Employee's Rollover Account as of the date received by the
Trustee.
If it is later determined that an amount contributed pursuant to the
above paragraph did not in fact qualify as a rollover contribution
under Code section 402(c) or 408(d)(3)(A)(ii), the balance credited to
the Employee's Rollover Account shall immediately be (1) segregated
from all other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Employee, and (3)
distributed to the Employee. Any such nonqualifying rollover shall be
deemed never to have been a part of the Plan.
4.2 Transfers From Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in cash
or in kind directly from another qualified plan. The Trustee may
refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable;
(b) instructions for posting amounts to Participants' Accounts are
incomplete;
(c) any amounts are not exempted by Code section 401(a)(11)(B) from
the annuity requirements of Code section 417; or
(d) any amounts include benefits protected by Code section 411(d)(6)
which would not be preserved under applicable Plan provisions.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
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5 EMPLOYER CONTRIBUTIONS
5.1 Company Match Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make
Company Match Contributions on behalf of each Participant who
contributed, as described in the following Allocation Method
paragraph, during the period.
(b) Allocation Method. The Company Match Contributions (including
any Forfeiture Account amounts applied as Company Match
Contributions in accordance with Section 8.4) for each period
shall total 25% of each eligible Participant's Employee
Contributions for the period, provided that no Company Match
Contributions (and Forfeiture Account amounts) shall be made
based upon a Participant's Contributions in excess of 6% of his
or her Pay. The Employer may change the 25% matching rate or the
6% of considered Pay to any other percentages, including 0%,
generally by notifying eligible Participants in sufficient time
to adjust their Contribution elections prior to the start of the
period for which the new percentages apply.
(c) Timing, Medium and Posting. The Employer shall make each
period's Company Match Contribution in cash as soon as is
feasible, and not later than the Employer's federal tax filing
date, including extensions, for deducting such Contribution. The
Trustee shall post such amount to each Participant's Company
Match Account once the total Contribution received has been
balanced against the specific amount to be credited to each
Participant's Company Match Account.
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6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of
Contribution and investment medium. Financial transactions shall be
accounted for at the individual Account level by posting each
transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for the
Investment Funds and in dollars for their Sweep and Participant loan
Accounts. At any point in time, the Account value shall be determined
using the most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
will be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade Date.
For any transaction to be processed as of a Trade Date, the Trustee
must receive instructions for the transaction by the Sweep Date. Such
instructions shall apply to amounts held in the Account on that Sweep
Date. Financial transactions of the Investment Funds shall be posted
to Participants' Accounts as of the Trade Date, based upon the Trade
Date values provided by the Trustee, and settled on the Settlement
Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares.
The Trustee is responsible for determining the share values of each
Investment Fund as of each Trade Date. To the extent an Investment
Fund is comprised of collective investment funds of the Trustee, or
any other fiduciary to the Plan, the share values shall be determined
in accordance with the rules governing such collective investment
funds, which are incorporated herein by reference. All other share
values shall be determined by the Trustee. The share value of each
Investment Fund shall be based on the fair market value of its
underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth below, are paid by the Employer directly, or
indirectly, through the Forfeiture Account as directed by the
Administrator, such fees and expenses shall be paid as set forth
below. The Employer may pay a lower portion of the fees and expenses
allocable to the Accounts of Participants who are no longer Employees
or who are not Beneficiaries, unless
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doing so would result in discrimination.
(a) Account Maintenance: Account maintenance fees and expenses, may
include but are not limited to, administrative, Trustee,
government annual report preparation, audit, legal,
nondiscrimination testing, and fees for any other special
services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee
shall reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but are
not limited to, recurring payment, Investment Fund election
change and loan fees. Transaction fees shall be charged to the
Participant's Account involved in the transaction provided that
no fee shall reduce a Participant's Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds
shall be charged at the Investment Fund level and reflected in
the net gain or loss of each Fund.
As of the Effective Date, a breakdown of which Plan fees and expenses
shall generally be borne by the Trust (and charged to individual
Participants' Accounts) and those that shall be paid by the Employer,
directly or indirectly, is set forth in Appendix B and may be changed
from time to time, in writing, without the necessity of amending this
Plan and Trust document.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the
Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Account of the
Participant and accounted for in dollars as an earmarked asset of the
borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had no
error or omission been made. Funds necessary for any such restoration
shall be provided through payment made by the Employer, or by the
Trustee to the extent the error or omission is attributable to actions
or inactions of the Trustee, or if the restoration involves an
Employer Contribution Account, the Administrator may direct the
Trustee to use amounts from the Forfeiture Account.
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6.8 Participant Statements
The Administrator shall provide Participants with statements of their
Accounts as soon after the end of each quarter of the Plan Year as is
administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during the period of
converting the prior accounting system of the Plan and Trust to
conform to the individual Participant accounting system described in
this Section. This includes, but is not limited to, the method for
allocating net investment gains or losses and the extent, if any, to
which contributions received by and distributions paid from the Trust
during this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee
entitled to any portion of a Participant's Account under a QDRO as of
the date and in accordance with the directions specified in the QDRO.
In addition, a separate Account may be established during the period
of time the Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic relations order
qualifies as a QDRO. Such a separate Account shall be valued and
accounted for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate payee
may be distributed, in a form as permissible under the
Distributions Once Employment Ends Section, to the alternate
payee at the time specified in the QDRO, regardless of whether
the Participant is entitled to a distribution from the Plan at
such time.
(b) Participant Loans. Except to the extent required by law, an
alternate payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such Account.
If a QDRO specifies that the alternate payee is entitled to any
portion of the Account of a Participant who has an outstanding
loan balance, all outstanding loans shall generally continue to
be held in the Participant's Account and shall not be divided
between the Participant's and alternate payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet been
distributed, the alternate payee may direct the investment of
such Account in the same manner as if he or she were a
Participant.
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7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and loan Accounts, the Trust shall be
maintained in various Investment Funds. The Administrator shall
select the Investment Funds offered to Participants and may change the
number or composition of the Investment Funds, subject to the terms
and conditions agreed to with the Trustee. As of the Effective Date,
a list of the Investment Funds offered to Participants is set forth in
Appendix A, and may be changed from time to time, in writing, without
the necessity of amending this Plan and Trust document.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or her
Contribution Accounts
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds offered in
accordance with the procedures established by the Administrator and
Trustee. However, during the period of converting the prior
accounting system of the Plan and Trust to conform to the individual
Participant accounting system described in Section 6, Trust assets may
be held in any investment vehicle permitted by the Plan, as directed
by the Administrator, irrespective of Participant investment
elections.
The Administrator may set a maximum percentage of the total election
that a Participant may direct into any specific Investment Fund, which
maximum, if any, as of the Effective Date is as set forth in Appendix
A, and may be changed from time to time, in writing, without the
necessity of amending this Plan and Trust document.
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection of his
or her Investment Fund choices. No fiduciary with respect to the Plan
is empowered to advise a Participant as to the manner in which his or
her Accounts are to be invested, and the fact that an Investment Fund
is offered shall not be construed to be a recommendation for
investment.
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the investment
of that portion of a Participant's Account which is not yet held in an
Investment Fund and for which no valid investment election is on file.
The Investment Fund specified as of the Effective Date is as set forth
in Appendix A, and may be changed from time to time, in writing,
without the necessity of amending this Plan and Trust document.
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7.5 Timing
A Participant shall make his or her initial investment election upon
becoming a Participant and may change his or her election at any time
in accordance with the procedures established by the Administrator and
Trustee. Investment elections received by the Trustee by the Sweep
Date will be effective on the following Trade Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a Participant's
Account for Investment Fund election changes in excess of a specified
number per year as determined by the Administrator.
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8 VESTING & FORFEITURES
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in these Accounts at all times:
Employee Basic Account
Employee Supplemental Account
Rollover Account
8.2 Full Vesting upon Certain Events
A Participant's entire Account shall become fully vested once he or
she has attained his or her Normal Retirement Date as an Employee or
upon his or her leaving the Employer due to his or her Disability or
death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's Company
Match Account shall become vested in accordance with the following
schedule:
YEARS OF VESTING VESTED
SERVICE PERCENTAGE
------- ----------
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
If this vesting schedule is changed, the vested percentage for each
Participant shall not be less than his or her vested percentage
determined as of the last day prior to this change, and for any
Participant with at least three Years of Vesting Service when the
schedule is changed, vesting shall be determined using the more
favorable vesting schedule.
8.4 Forfeitures
A Participant's non-vested Account balance shall be forfeited as of
the Settlement Date following the Sweep Date on which the
Administrator has reported to the Trustee that the Participant's
employment has terminated with all Related Companies. Forfeitures
from all Employer Contribution Accounts shall be transferred to and
maintained in a single Forfeiture Account, which shall be invested in
interest bearing deposits of the Trustee. Forfeiture Account amounts
shall be utilized to restore Accounts, to pay Plan fees and expenses
and to reduce Company Match Contributions as directed by the
Administrator.
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8.5 Rehired Employees
(a) Service. If a former Employee is rehired, all Years of Vesting
Service credited prior to his or her termination of employment
shall be counted in determining his or her vested interest.
(b) Account Restoration. If a former Employee is rehired before he
or she has a Break in Service, the amount forfeited when his or
her employment last terminated shall be restored to his or her
Account. The restoration shall include the interest which would
have been credited had such forfeiture been invested in the Sweep
Account from the date forfeited until the date the restoration
amount is determined. The amount shall come from the Forfeiture
Account to the extent possible, and any additional amount needed
shall be contributed by the Employer. The vested interest in his
or her restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current account balance
D = amount previously distributed
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9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
Effective January 1, 1995, loans to Participants are permitted
pursuant to the terms and conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with such
advance notice as prescribed by the Administrator. All loans shall be
evidenced by a promissory note, secured only by the portion of the
Participant's Account from which the loan is made, and the Plan shall
have a lien on this portion of his or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
take out a loan under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that a loan request conforms to the requirements described
in this Section and granting such request.
9.5 Loan Funding Limits
The loan amount must meet all of the following limits as determined as
of the Sweep Date the loan is processed:
(a) Plan Minimum Limit. The minimum amount for any loan is $500.
(b) Plan Maximum Limit. Subject to the legal limit described in (c)
below, the maximum a Participant may borrow, including the
outstanding balance of existing Plan loans, is 100% of the
following Accounts which are fully vested:
Employee Basic Account
Company Match Account
Employee Supplemental Account
Rollover Account
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is 50%
of his or her vested Account balance, not to exceed $50,000.
However, the
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$50,000 maximum is reduced by the Participant's highest
outstanding loan balance during the 12 month period ending on the
day before the Sweep Date as of which the loan is made. For
purposes of this paragraph, the qualified plans of all Related
Companies shall be treated as though they are part of this Plan
to the extent it would decrease the maximum loan amount.
9.6 Maximum Number of Loans
A Participant may have a maximum of two loans outstanding at any given
time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of his or
her own Accounts. The available assets shall be determined first by
Account type and then by investment type within each type of Account.
The hierarchy for loan funding by type of Account shall be the order
listed in the preceding Plan Maximum Limit paragraph. Within each
Account used for funding a loan, amounts shall first be taken from the
Sweep Account and then taken by type of investment in direct
proportion to the market value of the Participant's interest in each
Investment Fund as of the Trade Date on which the loan is processed.
Loans will be funded on the Settlement Date following the Trade Date
as of which the loan is processed. The Trustee shall make payment to
the Participant as soon thereafter as administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate with
the prevailing interest rate charged by persons in the business of
lending money for loans which would be made under similar
circumstances. As of the Effective Date, the interest rate is
determined as set forth in Appendix C, and may be changed from time to
time, in writing, without the necessity of amending this Plan and
Trust document.
9.9 Repayment
Substantially level amortization shall be required of each loan with
payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The Participant
may choose the loan repayment period, not to exceed 5 years. However,
the term may be for any period not to exceed 15 years if the purpose
of the loan is to acquire the Participant's principal residence.
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9.10 Repayment Hierarchy
Loan principal repayments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in direct
proportion to the principal payment. Loan payments are credited by
investment type based upon the Participant's current investment
election for new Contributions.
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments for up to
6 months for a Participant who is on a Leave of Absence without pay.
During the suspension period interest shall continue to accrue on the
outstanding loan balance. At the expiration of the suspension period
all outstanding loan payments and accrued interest thereon shall be
due unless otherwise agreed upon by the Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan payments are more
than 90 days late. A Participant shall then have 30 days from the
time he or she receives written notice of the default and a demand for
past due amounts to cure the default before it becomes final.
In the event of default, the Administrator may direct the Trustee to
report the default as a taxable distribution. As soon as a Plan
withdrawal or distribution to such Participant would otherwise be
permitted, the Administrator may instruct the Trustee to execute upon
its security interest in the Participant's Account by distributing the
note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant loan
once a Participant's employment with all Related Companies has
terminated or if the Plan is terminated.
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10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and as required by law as set forth in Section 11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such manner
and with such advance notice as prescribed by the Administrator. The
Participant shall be provided the notice prescribed by Code section
402(f).
If an in-service withdrawal is one to which Code sections 401(a)(11)
and 417 do not apply, such in-service withdrawal may commence less
than 30 days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notice to
consider his or her option to elect or not elect a Direct
Rollover for the portion, if any, of his or her in-service
withdrawal which will constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice, affirmatively elects
a Direct Rollover for the portion, if any, of his or her in-
service withdrawal which will constitute an Eligible Rollover
Distribution or alternatively elects to have such portion made
payable directly to him or her, thereby not electing a Direct
Rollover.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
make an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that an in-service withdrawal request conforms to the
requirements described in this Section and granting such request.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of withdrawal.
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With regard to the portion of a withdrawal representing an Eligible
Rollover Distribution, a Participant may elect a Direct Rollover. The
form of payment for an in-service withdrawal shall be a single lump
sum and payment shall be made in cash.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely from
the assets of his or her own Accounts and will be based on the Account
values as of the Trade Date the in-service withdrawal is processed.
The available assets shall be determined first by Account type and
then by investment type within each type of Account. Within each
Account used for funding an in-service withdrawal, amounts shall first
be taken from the Sweep Account and then taken by type of investment
in direct proportion to the market value of the Participant's interest
in each Investment Fund (which excludes Participant loans) as of the
Trade Date on which the in-service withdrawal is processed.
In-Service withdrawals will be funded on the Settlement Date following
the Trade Date as of which the in-service withdrawal is processed.
The Trustee shall make payment as soon thereafter as administratively
feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request the
withdrawal of up to the amount necessary to satisfy a financial
need including amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals (1) on
account of a Participant's "Deemed Financial Need", and (2) which
are "Demonstrated as Necessary" to satisfy the financial need
will be approved.
(b) "Deemed Financial Need". Financial commitments relating to:
(1) the payment of unreimbursable medical expenses described
under Code section 213(d) incurred (or to be incurred) by
the Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments) of the Employee's
principal residence;
(3) the payment of unreimbursable tuition and related
educational fees for up to the next 12 months of post-
secondary education for the Employee, his or her spouse or
dependents;
(4) the payment of amounts necessary for the Employee to prevent
losing his or her principal residence through eviction or
foreclosure on the mortgage; or
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<PAGE>
(5) any other circumstance specifically permitted under Code
section 401(k)(2)(B)(i)(IV).
(c) "Demonstrated as Necessary". A withdrawal is "demonstrated as
necessary" to satisfy the financial need only if the withdrawal
amount does not exceed the financial need, the Employee
represents that he or she is unable to relieve the financial need
(without causing further hardship) by doing any or all of the
following and the Administrator does not have actual knowledge to
the contrary:
(1) receiving any reimbursement or compensation from insurance
or otherwise;
(2) reasonably liquidating his or her assets and the assets of
his or her spouse or minor children that are reasonably
available to the Employee;
(3) ceasing all of his or her contributions to all qualified and
nonqualified plans of deferred compensation and all stock
option or stock purchase plans maintained by Related
Companies;
(4) obtaining all other possible withdrawals and nontaxable
loans available from all plans maintained by Related
Companies; and
(5) obtaining all possible loans from commercial sources on
reasonable commercial terms.
(d) Account Sources for Withdrawal. The withdrawal amount shall come
only from the Participant's fully vested Accounts, in the
following priority order:
Rollover Account
Employee Supplemental Account
Employee Basic Account
The amount that may be withdrawn from a Participant's Employee
Basic and Employee Supplemental Accounts shall not include any
earnings credited to such Accounts.
(e) Permitted Frequency. There is no restriction on the number of
Hardship withdrawals permitted to a Participant.
10.8 Rollover Account Withdrawals
(a) Requirements. A Participant who is an Employee may withdraw up
to the entire balance from his or her Rollover Account.
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<PAGE>
(b) Permitted Frequency. The maximum number of Rollover Account
withdrawals permitted to a Participant in any 6-month period is
one.
(c) Suspension from Further Contributions. A Rollover Account
withdrawal shall not affect a Participant's ability to make or be
eligible to receive further Contributions.
10.9 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and over age
59 1/2 may withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources for Withdrawal. The withdrawal amount shall come
only from the Participant's fully vested Accounts, in the
following priority order:
Rollover Account
Employee Basic Account
Company Match Account
Employee Supplemental Account
(c) Permitted Frequency. The maximum number of Over Age 59 1/2
withdrawals permitted to a Participant in any 6-month period is
one.
(d) Suspension from Further Contributions. An Over Age 59 1/2
withdrawal shall not affect a Participant's ability to make or be
eligible to receive further Contributions.
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11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional times
and forms of distribution available, to include the notices prescribed
by Code section 402(f) and Code section 411(a)(11). Subject to the
other requirements of this Section, a Participant, or his or her
Beneficiary in the case of his or her death, may elect, in such manner
and with such advance notice as prescribed by the Administrator, to
have his or her vested Account balance paid to him or her beginning
upon any Settlement Date following the Participant's termination of
employment with all Related Companies or, if earlier, at the time
required by law as set forth in Section 11.7.
If a distribution is one to which Code sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notices to
consider the decision as to whether to elect a distribution and
if so to elect a particular form of distribution and to elect or
not elect a Direct Rollover for all or a portion, if any, of his
or her distribution which will constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice, affirmatively elects
a distribution and a Direct Rollover for all or a portion, if
any, of his or her distribution which will constitute an Eligible
Rollover Distribution or alternatively elects to have all or a
portion made payable directly to him or her, thereby not electing
a Direct Rollover for all or a portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
receive a distribution under the Plan.
11.3 Payment Form and Medium
A Participant shall be paid in the form of a single lump sum.
Notwithstanding, a Participant who is an Employee at the time he or
she is required by law to commence distribution, or anytime
thereafter, may instead elect to be paid annually in a lump sum an
amount sufficient to comply with Code section 401(a)(9).
Distributions shall generally be made in cash. With regard to the
portion of a distribution representing an Eligible Rollover
Distribution, a Distributee may elect a Direct Rollover for all or a
portion of such amount.
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11.4 Distribution of Small Amounts
If, at the time a Participant's employment with all Related Companies
ends, the Participant's vested Account balance is $3,500 or less, the
Participant's benefit may be paid as a single lump sum, without his or
her consent, after his or her employment with all Related Companies
ends in accordance with procedures prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the assets
of his or her own Accounts and will be based on the Account values as
of the Trade Date the distribution is processed. The available assets
shall be determined first by Account type and then by investment type
within each type of Account. Within each Account used for funding a
distribution, amounts shall first be taken from the Sweep Account and
then taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund as of the
Trade Date on which the distribution is processed.
Distributions will be funded on the Settlement Date following the
Trade Date as of which the distribution is processed. The Trustee
shall make payment as soon thereafter as administratively feasible.
11.6 Deemed Distribution
For purposes of Section 8.4, vested Account balances will be deemed
distributed as of the Settlement Date following the Sweep Date on
which the Administrator has reported to the Trustee that the
Participant's employment with all Related Companies has terminated.
11.7 Latest Commencement Permitted
In addition to any other Plan requirements and unless a Participant
elects otherwise, his or her benefit payments will begin not later
than 60 days after the end of the Plan Year in which he or she attains
age 62 or retires, whichever is later. However, if the amount of the
payment or the location of the Participant (after a reasonable search)
cannot be ascertained by that deadline, payment shall be made no later
than 60 days after the earliest date on which such amount or location
is ascertained but in no event later than as described below.
Benefit payments shall begin by the April 1 immediately following the
end of the calendar year in which the Participant attains age 70 1/2
(whether or not he or she is an Employee).
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11.8 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be
completed within a period not to exceed the lives or the joint and
last survivor life expectancy of the Participant and his or her
Beneficiary. The life expectancies of a Participant and his or her
Beneficiary may not be recomputed annually.
11.9 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her sole
primary Beneficiary, the minimum annual distribution for each calendar
year, beginning with the year in which he or she attains age 70 1/2,
shall not be less than the quotient obtained by dividing (a) the
Participant's vested Account balance as of the last Trade Date of the
preceding year by (b) the applicable divisor as determined under the
incidental benefit requirements of Code section 401(a)(9).
11.10 Payment to Beneficiary
Payment to a Beneficiary must be completed by the end of the calendar
year that contains the fifth anniversary of the Participant's death,
except that:
(a) If the Participant dies after the April 1 immediately following
the end of the calendar year in which he or she attains age
70 1/2, payment to his or her Beneficiary must be made at least
as rapidly as provided in the Participant's distribution election;
(b) If the surviving spouse is the Beneficiary, payments need not
begin until the end of the calendar year in which the Participant
would have attained age 70 1/2 and must be completed within the
spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (1) before the April 1 immediately following the
end of the calendar year in which the Participant would have
attained age 70 1/2 and (2) before payments have begun to the
spouse, the spouse will be treated as the Participant in applying
these rules.
11.11 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a Participant's
spouse shall be the sole primary Beneficiary unless
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the designation includes Spousal Consent for another Beneficiary. If
no proper designation is in effect at the time of a Participant's
death or if the Beneficiary does not survive the Participant, the
Beneficiary shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, PER STIRPES (by right of
representation), or
(c) Participant's estate.
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12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12 (where a
definition is contained in both Sections 1 and 12, for purposes of
Section 12 the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average Percentage
calculated using Deferrals allocated to Participants as of a date
within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated percentages
for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions"
(as defined in this Section) made on each Participant's behalf
for the Plan Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an Eligible
Employee while a Participant. (Employee Contributions to this
Plan or comparable contributions to plans of Related Companies
which will be refunded solely because they exceed the
Contribution Dollar Limit are included in the percentage for the
HCE Group but not for the NHCE Group.)
(f) "Contributions" shall include Company Match Contributions. In
addition, Contributions may include Employee Contributions, but
only to the extent that (1) the Employer elects to use them, (2)
they are not used or counted in the ADP Test, and (3) they are
necessary to meet the ACP Test Alternative Limitation (defined in
Section 12.2 (b)) or the Multiple Use Test.
(g) "Deferrals" shall include Employee Contributions.
(h) "Family Member". An Employee who is, at any time during the Plan
Year or Lookback Year, a spouse, lineal ascendant or descendant,
or spouse of a lineal ascendant or descendant of (1) an active or
former
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Employee who at any time during Plan Year or Lookback Year is a
more than 5% Owner (within the meaning of Code section
414(q)(3)), or (2) an HCE who is among the 10 Employees with the
highest Compensation for such Year.
(i) "HCE" or "Highly Compensated Employee". With respect to each
Employer and its Related Companies, an Employee during the Plan
Year or Lookback Year who (in accordance with Code section
414(q)):
(1) Was a more than 5% Owner at any time during the Lookback
Year or Plan Year;
(2) Received Compensation during the Lookback Year (or in the
Plan Year if among the 100 Employees with the highest
Compensation for such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code sections 414(q)(1)
and 415(d)), or (ii) $50,000 (as adjusted for such Year
pursuant to Code sections 414(q)(1) and 415(d)) in the case
of a member of the "top-paid group" (within the meaning of
Code section 414(q)(4)) for such Year), provided, however,
that if the conditions of Code section 414(q)(12)(B)(ii) are
met, the Company may elect for any Plan Year to apply clause
(i) by substituting $50,000 for $75,000 and not to apply
clause (ii);
(3) Was an officer of a Related Company and received
Compensation during the Lookback Year (or in the Plan Year
if among the 100 Employees with the highest Compensation for
such Year) that is greater than 50% of the dollar limitation
in effect under Code section 415(b)(1)(A) and (d) for such
Year (or if no officer has Compensation in excess of the
threshold, the officer with the highest Compensation),
provided that the number of officers shall be limited to 50
Employees (or, if less, the greater of three Employees or
10% of the Employees); or
(4) Was a Family Member at any time during the Lookback Year or
Plan Year, in which case the Contributions and Compensation
of the HCE and his or her Family Members shall be aggregated
and they shall be treated as a single HCE.
A former Employee shall be treated as an HCE if (1) such former
Employee was an HCE when he separated from service, or (2) such
former Employee was an HCE in service at any time after attaining
age 55.
The determination of who is an HCE, including the determinations
of the number and identity of Employees in the top-paid group,
the top 100 Employees and the number of Employees treated as
officers shall be made in accordance with Code section 414(q).
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(j) "HCE Group" and "NHCE Group". With respect to each Employer and
its Related Companies, the respective group of HCEs and NHCEs who
are eligible to have amounts contributed on their behalf for the
Plan Year, including Employees who would be eligible but for
their election not to participate or to contribute, or because
their Pay is greater than zero but does not exceed a stated
minimum.
(1) If the Related Companies maintain two or more plans which
are subject to the ADP or ACP Test and are considered as one
plan for purposes of Code sections 401(a)(4) or 410(b), all
such plans shall be aggregated and treated as one plan for
purposes of meeting the ADP and ACP Tests, provided that,
for Plan Years beginning after December 31, 1989, plans may
only be aggregated if they have the same Plan Year.
(2) If an HCE, who is one of the top 10 paid Employees or a more
than 5% Owner, has any Family Members, the Deferrals,
Contributions and Compensation of such HCE and his or her
Family Members shall be combined and treated as a single
HCE. Such amounts for all other Family Members shall be
removed from the NHCE Group percentage calculation and be
combined with the HCE's.
(3) If an HCE is covered by more than one cash or deferred
arrangement maintained by the Related Companies, all such
plans shall be aggregated and treated as one plan for
purposes of calculating the separate percentage for the HCE
which is used in the determination of the Average
Percentage.
(k) "Lookback Year". Pursuant to Code section 414(q), the Company
elects as the Lookback Year the 12 months ending immediately
prior to the start of the Plan Year.
(l) "Multiple Use Test". The test described in Section 12.4 which a
Plan must meet where the Alternative Limitation (described in
Section 12.2(b)) is used to meet both the ADP and ACP Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An Employee who is
not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must meet either
the Basic or Alternative Limitation when compared to the respective
ADP and ACP for the NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
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(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as
follows:
IF THE NHCE GROUP THEN THE MAXIMUM HCE
AVERAGE PERCENTAGE IS: GROUP AVERAGE PERCENTAGE IS:
---------------------- ----------------------------
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum
percentage to be used in place of the calculated percentage for all
HCEs that would reduce the ADP and/or ACP for the HCE group by a
sufficient amount to meet the ADP and ACP Tests.
(a) ADP Correction. Employee Contributions shall, by the end of the
next Plan Year, be refunded (including amounts previously
refunded because they exceeded the Contribution Dollar Limit) to
the Participant in an amount equal to the actual Deferrals minus
the product of the maximum percentage and the HCE's Compensation.
The excess amount shall first be taken from unmatched Employee
Contributions and then from matched Employee Contributions. Any
Company Match Contributions attributable to refunded excess
Employee Contributions as described in this Section shall be
deemed a Contribution made by reason of a mistake of fact and
removed from the Participant's Account.
(b) ACP Correction. Contributions shall, by the end of the next Plan
Year, be refunded to the Participant to the extent vested, and
forfeited to the extent such amounts were not vested, as of the
end of the Plan Year being tested in an amount equal to the
actual Contributions minus the product of the maximum percentage
and the HCE's Compensation.
(c) Investment Fund Sources. Once the amount of excess Deferrals
and/or Contributions is determined and with regard to excess
Deferrals, allocated by type of Deferral, amounts shall then be
taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund
(which excludes Participant loans) at the time the correction is
made.
(d) Family Member Correction. To the extent any reduction is
necessary with respect to an HCE and his or her Family Members
that have been combined and treated for testing purposes as a
single Employee, the excess Deferrals and Contributions from the
ADP and/or ACP Test shall be prorated among each such Participant
in direct proportion to his or her Deferrals or Contributions
included in each Test.
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12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used to
meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group
must also comply with the requirements of Code section 401(m)(9). Such
Code section requires that the sum of the ADP and ACP for the HCE
Group (as determined after any corrections needed to meet the ADP and
ACP Tests have been made) not exceed the sum (which produces the most
favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to either
the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce either or both the ADP or
ACP for the HCE Group by a sufficient amount to meet the multiple use
limit. Any excess shall be handled in the same manner that the
distribution of excess Deferrals or Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a Participant
or forfeited in accordance with Section 12.3 or 12.5 shall be adjusted
for investment gain or loss. Refunds or forfeitures shall not include
investment gain or loss for the period between the end of the
applicable Plan Year and the date of distribution.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and Multiple Use Test, and that the
Contribution Dollar Limit is not exceeded. In carrying out its
responsibilities, the Administrator shall have sole discretion to
limit or reduce Deferrals or Contributions at any time. The
Administrator shall maintain records which are sufficient to
demonstrate that the ADP Test, the ACP Test and Multiple Use Test,
have been met for each Plan Year for at least as long as the
Employer's corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and the
performance of the testing and any corrective action resulting
therefrom shall be made separately with regard to the Employees
of each Employer (and its Related Companies) that is not a
Related Company with the other Employer(s).
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(b) Collective Bargaining Units: The performance of the ADP Test,
and if applicable, the ACP Test and Multiple Use Test, and any
corrective action resulting therefrom shall be applied separately
to Employees who are eligible to participate in the Plan as a
result of a collective bargaining agreement.
In addition, separate testing may be applied, at the discretion of the
Administrator and to the extent permitted under Treasury regulations,
to any group of Employees for whom separate testing is permissible.
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13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account for a
Plan Year. Amounts include contributions (except for rollovers or
transfers from another qualified plan), forfeitures and, if the
Participant is a Key Employee (pursuant to Section 14) for the
applicable or any prior Plan Year, medical benefits provided pursuant
to Code section 419A(d)(1). For purposes of this Section 13.1,
"Account" also includes a Participant's account in all other defined
contribution plans currently or previously maintained by any Related
Company. The Plan Year refers to the year to which the allocation
pertains, regardless of when it was allocated. The Plan Year shall be
the Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this Plan and
any other defined contribution plan maintained by any Related Company
for any Plan Year shall not exceed the lesser of (1) 25% of his or her
Taxable Income or (2) the greater of $30,000 or one-quarter of the
dollar limitation in effect under Code section 415(b)(1)(A).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any additional
Contributions would produce an excess Annual Addition for such year,
Contributions to be made for the remainder of the Plan Year shall be
limited to the amount needed for each affected Participant to receive
the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a Participant's
Account (resulting from forfeitures, allocations, reasonable error in
determining Participant compensation or the amount of elective
contributions, or other facts and circumstances acceptable to the
Internal Revenue Service) the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant to the
extent of his or her Employee Contributions that were not matched and
then Employee Contributions that were matched, (however to the extent
Employee Contributions were matched, the applicable Company Match
Contributions shall be forfeited in proportion to the returned matched
Employee Contributions) and the remaining excess, if any, shall be
forfeited by the Participant and together with forfeited Company Match
Contributions used to reduce subsequent Contributions as soon as is
administratively feasible.
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13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution
plan, the excess shall be corrected by reducing the Annual Addition to
this Plan only after all possible reductions have been made to the
other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the "projected
annual benefit" and the denominator is the greater of 125% of the
"protected current accrued benefit" or the normal limit which is the
lesser of (1) 125% of the maximum dollar limitation provided under
Code section 415(b)(1)(A) for the Plan Year or (2) 140% of the amount
which may be taken into account under Code section 415(b)(1)(B) for
the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by the
Plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit plan in
existence (1) on July 1, 1982, shall be the accrued annual
benefit provided for under Public Law 97-248, section 235(g)(4),
as amended, or (2) on May 6, 1986, shall be the accrued annual
benefit provided for under Public Law 99-514, section 1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date and the denominator is the
sum of the "annual amounts" for each year in which the Participant has
performed service with a Related Company. The "annual amount" for any
Plan Year is the lesser of (1) 125% of the Code section 415(c)(1)(A)
dollar limitation (determined without regard to subsection (c)(6)) in
effect for the Plan Year and (2) 140% of the Code section 415(c)(1)(B)
amount in effect for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code section
415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248, section
235(g)(3), as amended, or Public Law 99-514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit plan
maintained by a Related Company, the sum of the Defined Benefit
Fraction and the Defined Contribution Fraction for any Plan Year may
not exceed 1.0. If the combined fraction exceeds 1.0 for any Plan
Year, the Participant's benefit under any defined benefit plan (to the
extent it has not been distributed or used to purchase an annuity
contract) shall be limited so that the combined fraction does not
exceed 1.0 before any defined contribution limits will be enforced.
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<PAGE>
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the following
meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified plan
of an Employer (and its Related Companies) (1) in which a Key
Employee is a participant or was a participant during the
determination period (regardless of whether such plan has
terminated), or (2) which enables another plan in the group to
meet the requirements of Code sections 401(a)(4) or 410(b). The
Employer may also treat any other qualified plan as part of the
group if the group would continue to meet the requirements of
Code sections 401(a)(4) and 410(b) with such plan being taken
into account.
(b) "Determination Date". The last Trade Date of the preceding Plan
Year or, in the case of the Plan's first year, the last Trade
Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period ending
on the Determination Date was:
(1) an officer of a Related Company whose Compensation (i)
exceeds 50% of the amount in effect under Code section
415(b)(1)(A) and (ii) places him within the following
highest paid group of officers:
NUMBER OF EMPLOYEES NUMBER OF
NOT EXCLUDED UNDER CODE HIGHEST PAID
SECTION 414(q)(8) OFFICERS INCLUDED
----------------- -----------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section
414(q)(8)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds $150,000, or
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<PAGE>
(4) a more than 0.5% Owner who is among the 10 Employees owning
the largest interest in a Related Company and whose
Compensation exceeds the amount in effect under Code section
415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1) an
Employee's Account, (2) the present value of his or her other
accrued benefits provided by all qualified plans within the
Aggregation Group, and (3) the aggregate distributions made
within the five year period ending on such date. Plan Benefits
shall exclude rollover contributions and plan to plan transfers
made after December 31, 1983 which are both employee initiated
and from a plan maintained by a non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits of Key
Employees account for more than 60% of the Plan Benefits of all
Employees who have performed services at any time during the five
year period ending on the Determination Date. The Plan Benefits
of Employees who were, but are no longer, Key Employees (because
they have not been an officer or Owner during the five year
period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in which
the Plan is Top Heavy, the Employer shall not allow any
contributions (other than a Rollover Contribution) to be made by
or on behalf of any Key Employee unless the Employer makes a
contribution (other than Employee and Company Match
Contributions) on behalf of all Participants who were Eligible
Employees as of the last day of the Plan Year in an amount equal
to at least 3% of each such Participant's Taxable Income. The
Administrator shall remove any such contributions (including
applicable investment gain or loss) credited to a Key Employee's
Account in violation of the foregoing rule and return them to the
Employer or Employee to the extent permitted by the Limited
Return of Contributions paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding, contributions shall
be permitted on behalf of Key Employees if the Employer also
maintains a defined benefit plan which automatically provides a
benefit which satisfies the Code section 416(c)(1) minimum
benefit requirements, including the adjustment provided in Code
section 416(h)(2)(A), if applicable. If this Plan is part of an
aggregation group in which a Key Employee is receiving a benefit
and no minimum is provided in any other plan, a minimum
contribution of at least 3% of Taxable Income shall be provided
to the Participants specified in the preceding paragraph. In
addition, the Employer may offset a defined benefit minimum by
contributions (other than Employee and Company Match
Contributions) made to this Plan.
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14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction and
the Defined Contribution Fraction.
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<PAGE>
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the Committee
and/or the Trustee, as applicable, whose specific duties are
delineated in this Plan and Trust. In addition, Plan fiduciaries also
include any other person to whom fiduciary duties or responsibility is
delegated with respect to the Plan. Any person or group may serve in
more than one fiduciary capacity with respect to the Plan. To the
extent permitted under ERISA section 405, no fiduciary shall be liable
for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable
expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as to
minimize the risk of large losses, unless under the circumstances
it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of ERISA
section 3(16), which is responsible for compliance with all reporting
and disclosure requirements, except those that are explicitly the
responsibility of the Trustee under applicable law. The Administrator
and/or Committee shall have any necessary authority to carry out such
functions through the actions of the Administrator, duly appointed
officers of the Company, and/or the Committee.
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15.4 Administrator Duties
The Administrator shall have the discretionary authority to construe
this Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the
intent and purposes thereof, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken in good
faith by the Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum possible deference
allowed by law. In addition to the duties listed elsewhere in this
Plan and Trust, the Administrator's authority shall include, but not
be limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, withdrawals and
distributions;
(b) provide each Participant with a summary plan description no later
than 90 days after he or she has become a Participant (or such
other period permitted under ERISA section 104(b)(1)), as well as
informing each Participant of any material modification to the
Plan in a timely manner;
(c) make a copy of the following documents available to Participants
during normal work hours: this Plan and Trust (including
subsequent amendments), all annual and interim reports of the
Trustee related to the entire Plan, the latest annual report and
the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy bearing
in mind both the short-run and long-run needs and goals of the
Plan. To the extent Participants may direct their own
investments, the funding policy shall focus on which Investment
Funds are available for Participants to use; and
(f) adjudicate claims pursuant to the claims procedure described in
Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of ERISA
section 412.
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<PAGE>
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has appointed a Committee
to administer the Plan on its behalf. The Company shall provide the
Trustee with the names and specimen signatures of any persons
authorized to serve as Committee members and act as or on its behalf.
Any Committee member appointed by the Company shall serve at the
pleasure of the Company, but may resign by written notice to the
Company. Committee members shall serve without compensation from the
Plan for such services. Except to the extent that the Company
otherwise provides, any delegation of duties to a Committee shall
carry with it the full discretionary authority of the Administrator to
complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to the
Committee may be done by a majority of its members. The majority
may be expressed by a vote at a meeting or in writing without a
meeting, and a majority action shall be equivalent to an action
of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such notice,
place and times as it determines necessary to conduct its
functions properly.
(c) Reliance by Trustee. The Committee may authorize one or more of
its members to execute documents on its behalf and may authorize
one or more of its members or other individuals who are not
members to give written direction to the Trustee in the
performance of its duties. The Committee shall provide such
authorization in writing to the Trustee with the name and
specimen signatures of any person authorized to act on its
behalf. The Trustee shall accept such direction and rely upon it
until notified in writing that the Committee has revoked the
authorization to give such direction. The Trustee shall not be
deemed to be on notice of any change in the membership of the
Committee, parties authorized to direct the Trustee in the
performance of its duties, or the duties delegated to and by the
Committee until notified in writing.
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<PAGE>
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in accordance
with those provisions of this Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan expenses
not paid directly by the Employer. Plan benefits will be drawn solely
from the Trust and paid by the Trustee as directed by the
Administrator. Notwithstanding, the Administrator may appoint, with
the approval of the Trustee, another trustee to hold and administer
Plan assets which do not meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the Trustee to
invest Trust assets in one or more Investment Funds. The number and
composition of Investment Funds may be changed from time to time, in
writing, without the necessity of amending this Plan and Trust
document. The Trustee may establish reasonable limits on the number
of Investment Funds as well as the acceptable assets for any such
Investment Fund. Each of the Investment Funds may be comprised of any
of the following:
(a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other
service provider to, such company;
(b) collective investment funds maintained by the Trustee, or any
other fiduciary to the Plan, which are available for investment
by trusts which are qualified under Code sections 401(a) and
501(a);
(c) individual equity and fixed income securities which are readily
tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or insurance
company; and
(e) interest bearing deposits of the Trustee.
Any Investment Fund assets invested in a collective investment fund,
shall be subject to all the provisions of the instruments establishing
and governing such fund. These instruments, including any subsequent
amendments, are incorporated herein by reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment manager
of each Investment Fund to maintain sufficient deposit or money market
type assets in
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<PAGE>
each Investment Fund to handle the Fund's liquidity and disbursement
needs. Each Participant's and Beneficiary's Sweep Account, which is
used to hold assets pending investment or disbursement, shall consist
of interest bearing deposits of the Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are
received from the Administrator, Participants, or Beneficiaries. Such
instructions shall remain in effect until changed by the
Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company Shares
The Administrator shall be entitled to vote proxies or exercise any
shareholder rights relating to shares held on behalf of the Plan in a
registered investment company. Notwithstanding, the authority to vote
proxies and exercise shareholder rights related to such shares held in
a Custom Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee, an
investment manager for any Investment Fund established by the Trustee
solely for Participants of this Plan (a "Custom Fund"). The
investment manager may be the Administrator, Trustee or an investment
manager pursuant to ERISA section 3(38). The Administrator shall
advise the Trustee in writing of the appointment of an investment
manager and shall cause the investment manager to acknowledge to the
Trustee in writing that the investment manager is a fiduciary to the
Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee, shall
be established for a Custom Fund. If a Custom Fund consists
solely of collective investment funds or shares of a registered
investment company (and sufficient deposit or money market type
assets to handle the Fund's liquidity and disbursement needs),
its underlying instruments shall constitute the guidelines.
(b) Authority of Investment Manager. The investment manager of a
Custom Fund shall have the authority to vote or execute proxies,
exercise shareholder rights, manage, acquire, and dispose of
Trust assets.
(c) Custody and Trade Settlement. Unless otherwise agreed to by the
Trustee, the Trustee shall maintain custody of all Custom Fund
assets and be responsible for the settlement of all Custom Fund
trades. For
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<PAGE>
purposes of this section, shares of a collective investment fund,
shares of a registered investment company and guaranteed
investment contracts issued by a bank or insurance company, shall
be regarded as the Custom Fund assets instead of the underlying
assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the Administrator
nor the Trustee shall be obligated to invest or otherwise manage
any Custom Fund assets for which the Trustee or Administrator is
not the investment manager nor shall the Administrator or Trustee
be liable for acts or omissions with regard to the investment of
such assets except to the extent required by ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund into
two or more funds in the event any assets in the Fund are illiquid or
the value is not readily determinable. In the event of such
segregation, the Company shall give instructions to the Trustee on
what value to use for the split-off assets, and the Trustee shall not
be responsible for confirming such value.
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<PAGE>
17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe those
provisions of this Plan and Trust which relate to the Trustee and to
do all things necessary or convenient to the administration of the
Trust, whether or not such powers are specifically set forth in this
Plan and Trust. Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties, and shall be given
the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in this
Plan and Trust, the Trustee shall have all the power, authority,
rights and privileges of an absolute owner of the Trust assets and,
not in limitation but in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage,
lease, grant options respecting, repair, alter, insure, or
distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or
conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in federal
book entry form or in any other form as will permit title thereto
to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or claims
in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities held
in such collective investment fund to brokers, dealers or other
borrowers and to permit such securities to be transferred into
the name and custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any Trust
assets outside the jurisdiction of the United States, except as
authorized by ERISA section 404(b).
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<PAGE>
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes with regard to any
Eligible Rollover Distribution that is not paid as a Direct
Rollover in accordance with the Participant's withholding
election or as required by law if no election is made or the
election is less than the amount required by law. With regard to
any taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes in accordance with the
Participant's withholding election or as required by law if no
election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from the
Investment Fund any taxes or assessments imposed by any taxing or
governmental authority on such Fund or its income, including
related interest and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide
the Administrator with an annual accounting of Trust assets and
information to assist the Administrator in meeting ERISA's annual
reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and provide
sufficient reporting to allow the Administrator to properly
monitor the Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting will
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period. Such
approval shall be final as to all matters and transactions stated
or shown therein and binding upon the Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, the
Trustee may engage a qualified independent appraiser to determine the
fair market value of such property, and the appraisal fees shall be
paid from the Investment Fund containing the asset.
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17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice, including
counsel for the Employer or counsel of the Trustee, upon any question
or matter arising under this Plan and Trust. When relied upon by the
Trustee, the opinion of such counsel shall be evidence that the
Trustee has acted in good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as may be
mutually agreed upon by the Company and the Trustee. Trustee fees and
all reasonable expenses of counsel and advisors retained by the
Trustee shall be paid in accordance with Section 6.
17.9 Trustee Duties and Limitations
In addition to the duties described in this Section 17, unless
otherwise agreed to by the Trustee, the Trustee's duties shall be
confined to construing the terms of the Plan and Trust as they relate
to the Trustee, receiving funds on behalf of and making payments from
the Trust, safeguarding and valuing Trust assets, and investing and
reinvesting Trust assets in the Investment Funds as directed by the
Administrator or Participants. The Trustee shall have no duty or
authority to ascertain whether Contributions are in compliance with
the Plan, to enforce collection or to compute or verify the accuracy
or adequacy of any amount to be paid to it by the Employer. The
Trustee shall not be liable for the proper application of any part of
the Trust with respect to any disbursement made at the direction of
the Administrator.
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18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee. The
Employer expressly reserves the right to discharge an Employee at any
time, with or without cause, without regard to the effect such
discharge would have upon the Employee's interest in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall not revert
to the Employer nor be diverted for any purpose other than the
exclusive benefit of Participants or their Beneficiaries; and (2) a
Participant's vested interest shall not be subject to divestment. As
provided in ERISA section 403(c)(2), the actual amount of a
Contribution made by the Employer (or the current value of the
Contribution if a net loss has occurred) may revert to the Employer
if:
(a) such Contribution is made by reason of a mistake of fact;
(b) initial qualification of the Plan under Code section 401(a) is
not received and a request for such qualification is made within
the time prescribed under Code section 401(b) (the existence of
and Contributions under the Plan are hereby conditioned upon such
qualification); or
(c) such Contribution is not deductible under Code section 404 (such
Contributions are hereby conditioned upon such deductibility) in
the taxable year of the Employer for which the Contribution is
made.
The reversion to the Employer must be made (if at all) within one year
of the mistaken payment of the Contribution, the date of denial of
qualification, or the date of disallowance of deduction, as the case
may be. A Participant shall have no rights under the Plan with
respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not otherwise
required by law, no benefit provided by the Plan may be anticipated,
assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as security for a
loan from the Plan which is permitted pursuant to Code section
4975.
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18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the Administrator
reasonably believes that any payee is legally incapable of giving a
valid receipt and discharge for any payment due him or her, the
Administrator shall have the payment of the benefit, or any part
thereof, made to the person (or persons or institution) whom it
reasonably believes is caring for or supporting the payee, unless it
has received due notice of claim therefor from a duly appointed
guardian or conservator of the payee. Any payment shall to the extent
thereof, be a complete discharge of any liability under the Plan to
the payee.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of a
Plan benefit after a reasonable search, the Administrator may at any
time thereafter treat such person's Account as forfeited and use such
amount to reduce subsequent Contributions as soon as administratively
feasible or as otherwise provided in Section 8. If such person
subsequently presents the Administrator with a valid claim for the
benefit, such person shall be paid the amount treated as forfeited,
plus the interest that would have been earned in the Sweep Account to
the date of determination. The Administrator shall pay the amount
through an additional Employer Contribution or direct the Trustee to
pay the amount from the Forfeiture Account.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with the
Administrator's determination of his or her right to Plan
benefits must submit a written claim and exhaust this claim
procedure before legal recourse of any type is sought. The claim
must include the important issues the interested party believes
support the claim. The Administrator, pursuant to the authority
provided in this Plan, shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to the
pertinent Plan provisions) and (2) the steps necessary to perfect
the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may make
a written appeal of the Administrator's initial decision, and the
Administrator shall respond in the same manner and form as
prescribed for denying a claim initially.
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(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
Days to Respond
Action From Last Action
------ ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it provides an
explanation within the normal period of why an extension is
needed and when its decision will be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text shall control
if any ambiguity or inconsistency exists between the headings and the
text. The singular and plural shall be interchanged wherever
appropriate. References to Participant shall include Beneficiary when
appropriate and even if not otherwise already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not otherwise
preempted, by the laws of the State of California. If any provision
of this Plan and Trust shall become invalid or unenforceable, that
fact shall not affect the validity or enforceability of any other
provision of this Plan and Trust. All provisions of this Plan and
Trust shall be so construed as to render them valid and enforceable in
accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries against
any and all liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to apply for
a favorable determination from the Internal Revenue Service with
respect to the qualification of the Plan upon its termination), in
relation to the Plan or Trust (1) including (without limitation)
expenses reasonably incurred in the defense of any claim relating to
the Plan or its assets, and amounts paid in any settlement relating to
the Plan or its assets, but (2) excluding liability resulting from
actions or inactions made in bad faith, or resulting from the
negligence or willful misconduct of the Trustee. The Company shall
have the right, but not the obligation, to conduct the defense of any
action to which this Section applies. The Plan fiduciaries are not
entitled to indemnity from the Plan assets relating to any such
action.
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19 AMENDMENT, MERGER AND TERMINATION
19.1 Amendment
The Company reserves the right to amend this Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be responsible
for adopting any amendments necessary to maintain the qualified status
of this Plan and Trust under Code sections 401(a) and 501(a). If the
Committee is acting as the Administrator in accordance with Section
15.6, it shall have the authority to adopt Plan and Trust amendments
which have no substantial adverse financial impact upon any Employer
or the Plan. All interested parties shall be bound by any amendment,
provided that no amendment shall:
(a) become effective unless it has been adopted in accordance with
the procedures set forth in Section 19.4;
(b) except to the extent permissible under ERISA and the Code, make
it possible for any portion of the Trust assets to revert to an
Employer or to be used for, or diverted to, any purpose other
than for the exclusive benefit of Participants and Beneficiaries
entitled to Plan benefits and to defray reasonable expenses of
administering the Plan;
(c) decrease the rights of any Employee to benefits accrued
(including the elimination of optional forms of benefits) to the
date on which the amendment is adopted, or if later, the date
upon which the amendment becomes effective, except to the extent
permitted under ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or her Employee
Basic Account unless the payment would otherwise be permitted
under Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless each
Participant and Beneficiary would, if the resulting plan were then
terminated, receive a benefit just after the merger, consolidation or
transfer which is at least equal to the benefit which would be
received if either plan had terminated just before such event.
19.3 Plan Termination
The Company may, at any time and for any reason, terminate the Plan in
accordance with the procedures set forth in Section 19.4, or
completely discontinue contributions. Upon either of these events, or
in the event of a
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partial termination of the Plan within the meaning of Code section
411(d)(3), the Accounts of each affected Employee who has not yet
incurred a Break in Service shall be fully vested. Complete
distributions or withdrawals will be made in accordance with the terms
of the Plan as in effect at the time of the Plan's termination or as
thereafter amended provided that a post-termination amendment will not
be effective to the extent that it violates Section 19.1 unless it is
required in order to maintain the qualified status of the Plan upon
its termination. The Trustee's and Employer's authority shall
continue beyond the Plan's termination date until all Trust assets
have been liquidated and distributed.
19.4 Amendment and Termination Procedures
The following procedural requirements shall govern the adoption of any
amendment or termination (a "Change") of this Plan and Trust:
(a) The Company may adopt any Change by action of its board of
directors in accordance with its normal procedures.
(b) The Committee, if acting as Administrator in accordance with
Section 15.6, may adopt any amendment within the scope of its
authority provided under Section 19.1 and in the manner specified
in Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2) signed and
dated by an executive officer of the Company or, in the case of
an amendment adopted by the Committee, at least one of its
members.
(d) If the effective date of any Change is not specified in the
document setting forth the Change, it shall be effective as of
the date it is signed by the last person whose signature is
required under clause (2) above, except to the extent that
another effective date is necessary to maintain the qualified
status of this Plan and Trust under Code sections 401(a) and
501(a).
(e) No change shall become effective until it is accepted and signed
by the Trustee (which acceptance shall not unreasonably be
withheld).
19.5 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its Plan
participation by action of its board of directors in accordance with
its normal procedures. Written notice of such action shall be signed
and dated by an executive officer of the Employer and delivered to the
Company. If the effective date of such action is not specified, it
shall be effective on, or as soon as reasonably practicable, after the
date of delivery. Upon the Employer's request, the Company may
instruct the Trustee and Administrator to spin off all affected
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Accounts and underlying assets into a separate qualified plan under
which the Employer shall assume the powers and duties of the Company.
Alternatively, the Company may treat the event as a partial
termination described above or continue to maintain the Accounts under
the Plan.
19.6 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or may be
removed by the Company at any time upon at least 90 days written
notice (or less if agreed to by both parties). In such event, the
Company shall appoint a successor trustee by the end of the notice
period. The successor trustee shall then succeed to all the powers
and duties of the Trustee under this Plan and Trust. If no successor
trustee has been named by the end of the notice period, the Company's
chief financial officer shall become the trustee, or if he or she
declines, the Trustee may petition the court for the appointment of a
successor trustee.
19.7 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as is administratively feasible after
its resignation or removal as Trustee, the Trustee shall transfer
to the successor trustee all property currently held by the
Trust. However, the Trustee is authorized to reserve such sum of
money as it may deem advisable for payment of its accounts and
expenses in connection with the settlement of its accounts or
other fees or expenses payable by the Trust. Any balance
remaining after payment of such fees and expenses shall be paid
to the successor trustee as soon as administratively feasible.
(b) Final Accounting. The Trustee shall provide a final accounting
to the Administrator within 90 days of the date Trust assets are
transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting will
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period. Such
approval shall be final as to all matters and transactions stated
or shown therein and binding upon the Administrator.
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<PAGE>
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered to Participants and Beneficiaries as of the
Effective Date include this set of daily valued funds:
CATEGORY FUNDS
-------- -----
MONEY MARKET Money Market
INCOME Income Accumulation
BALANCED Asset Allocation
EQUITY S&P 500 Stock
COMBINATION LifePath
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Money Market
Fund.
III. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, there are no maximum percentage restrictions
applicable to any Investment Funds.
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<PAGE>
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants.
2) Recordkeeping Fees: These are paid by the Employer on a quarterly basis.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding loan
balance.
4) Investment Fund Election Changes: For each Investment Fund election change
by a Participant, in excess of 4 changes per year, a $10 fee will be
assessed and billed/collected quarterly from the Participant's Account.
5) Additional Fees Paid by Employer: All other Plan related fees and expenses
shall be paid by the Employer. To the extent that the Administrator later
elects that any such fees shall be borne by Participants, estimates of the
fees shall be determined and reconciled, at least annually, and the fees
will be assessed monthly and billed/collected from Accounts quarterly.
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APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the Trustee's prime rate, plus 1%.
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TICKETMASTER
STOCK PLAN
(AS AMENDED AND RESTATED)
1. PREAMBLE.
Ticketmaster Group, Inc. (formerly known as "Ticketmaster Holdings
Group, Ltd."), an Illinois corporation (the "Company"), established the
Ticketmaster Stock Plan (the "Plan") as a means whereby the Company may,
through awards of (i) incentive stock options within the meaning of section
422 of the Code (as herein defined), (ii) stock appreciation rights, (iii)
non-qualified stock options, (iv) restricted stock, and (v) phantom stock:
(a) provide employees of the Company and its subsidiaries with
additional incentive to promote the success of the Company's and its
Subsidiaries' businesses;
(b) enable such employees to acquire proprietary interests in the
Company;
(c) encourage such employees to remain in the employ of the Company
and its Subsidiaries; and
(d) provide Officers and Directors of, and consultants to, the
Company and its Subsidiaries (who are not otherwise employees) with
additional incentive to promote the success of the Company's and its
Subsidiaries' businesses.
The Plan was adopted on June 30, 1994, subsequently amended on September
1, 1994, and is hereby further amended and restated in the form of this Plan
document effective as provided herein. The provisions of this Plan do not
apply to or affect any option, SAR, or stock heretofore or hereafter granted
under any other stock plan of the Company or any Subsidiary, and all such
options, SARs or stock continue to be governed by and subject to the
applicable provisions of the plan or agreement under which they were granted.
2. DEFINITIONS.
2.01 "BOARD" or "BOARD OF DIRECTORS" means the board of directors of the
Company.
2.02 "CAUSE" means, as determined in the sole discretion of the Board, a
Participant's (a) commission of a felony; (b) dishonesty or misrepresentation
involving the Company or any Subsidiary; (c) serious misconduct in the
performance or non-performance of Participant's responsibilities as an
employee, Officer, Director or consultant; (d) violation of a material
condition of employment or retention; (e) unauthorized use of trade secrets
or confidential information; or (f) aiding a competitor of the Company or any
Subsidiary.
<PAGE>
2.03 "CHANGE IN CONTROL" means, the occurrence of any one of the following
events:
(a) any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or which contemplates that
all or substantially all of the business and/ or assets of the Company
shall be controlled by another corporation or a recapitalization in which
the current controlling stockholders do not continue to be the controlling
stockholders;
(b) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company and/or its Subsidiaries;
(c) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval;
(d) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act), other than a person who is a stockholder of the
Company on the Option Date, who shall become the beneficial owner of
securities of the Company representing more than 50% of the combined voting
power of the Company's then outstanding securities ordinarily having the
right to vote in the election of directors;
(e) any sale, exchange or transfer (other than transfers to affiliated
entities, i.e. entities controlling, controlled by or under common control
with, the transferor) of securities of the Company representing more than
50% of (i) the total fair market value of the Company's then outstanding
equity securities, or (ii) the combined voting power of the Company's then
outstanding securities ordinarily having the right to vote in the election
of directors, whether pursuant to a tender or exchange offer, open market
offering, purchase or sale, privately negotiated purchase and sale or
otherwise; or
(f) if during a period of two consecutive years from the Option Date,
individuals who at the beginning of such period constituted the directors
of the Company cease for any reason to constitute a majority thereof
(unless the election, or nomination for election by the Company's
stockholders, of each director of the Company first elected during such
period was approved by a vote of at least a majority of the directors then
still in office who were directors at the beginning of any such period.
2.04 "CODE" means the Internal Revenue Code of 1986, as it exists now and
as it may be amended from time to time.
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<PAGE>
2.05 "COMMITTEE" means the committee comprised of two or more outside
Directors appointed by the Board to administer the Plan. Each member of the
Committee shall (a) be a member of the Board of Directors who has not at any
time within one year prior thereto, or at any time during such member's term of
service on the Committee, received any stock options, SARs or allocations of any
equity securities under the Plan or any other plan maintained by the Company or
any of its affiliates, except as permitted pursuant to the provisions of Rule
16b-3(c) (2) (i) of the Exchange Act or any successor rule thereof; and (b) be
an outside Director as determined under Treasury Regulation 26 CFR Section
1.162-27(e)(3) or any successor regulation thereto. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors.
2.06 "COMMON STOCK" means the Series A common stock of the Company, no par
value, or, if the various series of common stock are eliminated by amendment to,
or restatement of, the Company's Articles of Incorporation, the resulting class
of equity securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote for the election of directors.
2.07 "COMPANY" means Ticketmaster Group, Inc. (formerly known as
"Ticketmaster Holdings Group, Ltd"), an Illinois corporation, and any successor
thereto.
2.08 "DIRECTOR" means a member of the Board.
2.09 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as it
exists now or from time to time may hereafter be amended.
2.10 "FAIR MARKET VALUE" means for the relevant day:
(a) If shares of Common Stock are listed or admitted to unlisted
trading privileges on any national or regional securities exchange,
the last reported sale price, regular way, on the composite tape of
that exchange on the day Fair Market Value is to be determined;
(b) If the Common Stock is not listed or admitted to unlisted trading
privileges as provided in paragraph (a), and if sales prices for
shares of Common Stock are reported by the National Association of
Securities Dealers, Inc. Automated Quotations, Inc. National Market
System ("NASDAQ System"), then the last sale price for Common Stock
reported as of the close of business on the day Fair Market Value is
to be determined, or if no such sale takes place on that day, the
average of the high bid and low asked prices so reported; if Common
Stock is
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not traded on that day, the next preceding day on which such
stock was traded; or
(c) If trading of the Common Stock is not reported by the NASDAQ
System or on a stock exchange, Fair Market Value will be determined by
the Committee based upon the best available data, which determination
shall be conclusive for all purposes.
2.11 "ISO" means incentive stock options within the meaning of Section 422
of the Code.
2.12 "NAKED SAR" means a SAR issued not in connection with an ISO or NSO.
2.13 "NSO" means non-qualified stock options, which are not intended to
qualify under Section 422 of the Code.
2.14 "OFFICER" means a corporate officer of the Company or any Subsidiary.
2.15 "OPTION" means the right of a Participant, whether granted as an ISO
or an NSO, to purchase a specified number of shares of Common Stock, subject to
the terms and conditions of the Plan.
2.16 "OPTION DATE" means the date upon which an Option, SAR, Restricted
Stock or Phantom Stock is awarded to a Participant under the Plan.
2.17 "OPTION PRICE" means the price per share at which an Option may be
exercised.
2.18 "PARTICIPANT" means an individual to whom an Option, SAR, Phantom
Stock or Restricted Stock has been granted under the Plan.
2.19 "PHANTOM STOCK" means a hypothetical share of Common Stock issued as
phantom stock under the Plan.
2.20 "PLAN" means the Ticketmaster Stock Plan, as set forth herein and as
from time to time amended.
2.21 "RESTRICTED STOCK" means Common Stock awarded to a Participant
pursuant to this Plan and subject to the restrictions contained in Section 9.
2.22 "SAR" means a stock appreciation right. A SAR may be a Naked SAR or a
Tandem SAR.
2.23 "SECURITIES ACT" means the Securities Act of 1933, as it exists now or
from time to time may hereinafter be amended.
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<PAGE>
2.24 "SUBSIDIARY" means any corporation or other entity of which the
majority voting power or equity interest is owned directly or indirectly by the
Company.
2.25 "TANDEM SAR" means a SAR associated with and issued in connection with
an ISO or NSO.
2.26 RULES OF CONSTRUCTION.
(a) GOVERNING LAW. The construction and operation of this Plan are
governed by the laws of the State of Illinois.
(b) UNDEFINED TERMS. Unless the context requires another meaning,
any term not specifically defined in this Plan has the meaning given to it
by the Code.
(c) HEADINGS. All headings in this Plan are for reference only and
are not to be utilized in construing the Plan.
(d) GENDER. Unless clearly appropriate, all nouns of whatever gender
refer indifferently to persons of any gender.
(e) SINGULAR AND PLURAL. Unless clearly inappropriate, singular
terms refer also to the plural and VICE VERSA.
(f) SEVERABILITY. If any provision of this Plan is determined to be
illegal or invalid for any reason, the remaining provisions shall continue
in full force and effect and shall be construed and enforced as if the
illegal or invalid provision did not exist, unless the continuance of the
Plan in such circumstances is not consistent with its purposes.
3. STOCK SUBJECT TO THE PLAN.
Except as otherwise provided in Section 15, the aggregate number of shares
of Common Stock that may be issued under Options or as Restricted Stock, under
this Plan may not exceed 9,750,000 shares. Reserved shares may be either
authorized but unissued shares or treasury shares, in the Board's discretion.
If any awards hereunder shall terminate or expire, as to any number of shares,
new ISOs, NSOs, and Restricted Stock may thereafter be awarded with respect to
such shares. Except as otherwise provided in Section 15, the aggregate number
of shares of Common Stock that may be issued under Options, as Restricted Stock,
or upon which SARs or Phantom Stock may be awarded for any Participant may not
exceed 1,500,000.
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4. ADMINISTRATION.
The Plan shall be administered by the Committee. In addition to any other
powers set forth in this Plan, the Committee has the exclusive authority:
(a) to construe and interpret the Plan, and to remedy any ambiguities
or inconsistencies therein;
(b) to establish, amend and rescind appropriate rules and regulations
relating to the Plan;
(c) subject to the express provisions of the Plan, to determine the
individuals who will receive awards of Options, Restricted Stock, Phantom
Stock and/or SARs, the times when they will receive them, the number of
shares to be subject to each award and the Option Price, payment terms,
payment method, and expiration date applicable to each award;
(d) to contest on behalf of the Company or Participants, at the
expense of the Company, any ruling or decision on any matter relating to
the Plan or to any awards of ISOs, NSOs, Restricted Stock, Phantom Stock
and/or SARs;
(e) generally, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and the awards of
ISOs, NSOs, Restricted Stock, Phantom Stock and/or SARs granted thereunder
as it may deem necessary or advisable;
(f) to determine the form in which payment of a SAR or a Phantom
Stock award granted hereunder will be made (i.e., cash, Common Stock or a
combination thereof) or to approve a participant's election to receive cash
in whole or in part in settlement of the SAR or Phantom Stock award; and
(g) to determine the form in which tax withholding under Section 18
of this Plan will be made.
5. ELIGIBLE EMPLOYEES.
Subject to the provisions of the Plan, the Committee shall determine from
time to time those employees, Directors and Officers of, and consultants to, the
Company or a Subsidiary who shall be designated as Participants and the number,
if any, of Options, SARs, Restricted Stock, and Phantom Stock, or any
combination thereof, to be awarded to each such Participant; provided, however,
that no ISOs or Tandem SARs granted with respect to ISOs, shall be awarded under
the Plan after the expiration of the period of ten years from the date this Plan
is adopted by the Board. In addition, no ISOs may be awarded to a Director or
Officer who is not an employee of the Company or a Subsidiary.
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6. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS.
The Committee may in its discretion, grant ISOs to any Participant under
the Plan; provided, however, that no ISOs may be granted to a Participant who
is not an employee of the Company or a Subsidiary. Each ISO shall be evidenced
by an agreement between the Company and the Participant. Each ISO agreement, in
such form as is approved by the Committee, shall be subject to the following
express terms and conditions and to such other terms and conditions, not
inconsistent with the Plan, as the Committee may deem appropriate;
(a) OPTION PERIOD. Each ISO will expire as of the earliest of:
(i) the date on which it is forfeited under the provisions of
Section 13;
(ii) 10 years (or five years as specified in Section 6(e)) from
the Option Date;
(iii) three months after the Participant's termination of
employment for any reason other than death; or
(iv) six months after the Participant's death.
(b) OPTION PRICE. Subject to the provisions of Section 6(e), the
Option Price per share shall be determined by the Committee at the time any
ISO is granted, and shall not be less than the Fair Market Value of the
Common Stock subject to the ISO on the Option Date.
(c) OTHER OPTION PROVISIONS. The form of ISO authorized by the Plan
may contain such other provisions as the Committee may, from time to time,
determine; provided, however, that such other provisions may not be
inconsistent with any requirements imposed on qualified stock options under
Section 422 of the Code.
(d) LIMITATIONS ON AWARDS. The aggregate Fair Market Value,
determined as of the Option Date, of Common Stock with respect to which
ISOs are exercisable by a Participant for the first time during any
calendar year under all ISO plans of the Company and any Subsidiary shall
not exceed $100,000.
(e) AWARDS TO CERTAIN STOCKHOLDERS. Notwithstanding Sections 6(a)
and 6(b) hereof, if an ISO is granted to a Participant who owns stock
representing more than 10 percent of the voting power of all classes of
stock of the Company or a Subsidiary (as determined under the Code), the
exercise period specified in the ISO agreement for which the ISO
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thereunder is granted shall not exceed five years from the Option Date, and
the Option Price shall be at least 110% of the Fair Market Value (as of the
Option Date) of the Common Stock subject to the ISO.
7. TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION.
The Committee may, in its discretion, grant NSOs to any Participant under
the Plan. Each NSO shall be evidenced by an agreement between the Company and
the Participant. Each NSO agreement, in such form as is approved by the
Committee, shall be subject to the following express terms and conditions and to
such other terms and conditions, not inconsistent with the Plan as the Committee
may deem appropriate:
(a) OPTION PERIOD. Each NSO will expire as of the earliest of:
(i) the date on which it is forfeited under the provisions of
Section 13;
(ii) the date three months after the Participant's termination
of employment or membership on the Board, as applicable,
for any reason other than death; or
(iii) the date six months after the Participant's death.
(b) OPTION PRICE. At the time when the NSO is granted, the Committee
will fix the Option Price. The Option Price may be greater than, less than,
or equal to Fair Market Value on the Option Date, as determined in the sole
discretion of the Committee.
(c) OTHER OPTION PROVISIONS. The form of NSO authorized by the Plan
may contain such other provisions as the Committee may from time to time
determine.
8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
The Committee may, in its discretion, grant a SAR to any Participant under
the Plan. Each SAR shall be evidenced by an agreement between the Company and
the Participant, and may be a Naked SAR or a Tandem SAR. Each SAR awarded to
Participants under the Plan shall be subject to the following express terms and
conditions and to such other terms and conditions, not inconsistent with the
Plan, as the Committee shall deem appropriate:
(a) TANDEM SARS. Tandem SARs shall terminate on the same date as the
related ISO or NSO. A Tandem SAR shall be exercisable only if the Fair
Market Value of a share of Common Stock on the date of surrender exceeds
either the Option Price
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for the related ISO or the Fair Market Value of the Common Stock on the
Option Date, if related to an NSO, and then shall be exercisable to
the extent, and only to the extent, that the related ISO or NSO is
exercisable. A Tandem SAR shall entitle the Participant to whom it
is granted the right to elect, so long as such Tandem SAR is exercisable
and subject to such limitations as the Committee shall have imposed, to
surrender any then exercisable portion of his related ISO or NSO, in whole
or in part, and receive from the Company in exchange, without any payment
of cash (except for applicable employee withholding taxes), that number of
shares of Common Stock having an aggregate Fair Market Value on the date of
surrender equal to the product of (i) the excess of the Fair Market Value
of a share of Common Stock on the date of surrender over the per share
Option Price under such ISO or the Fair Market Value of the Common Stock on
the Option Date, if such SAR is related to an NSO and (ii) the number of
shares of Common Stock subject to such ISO or NSO or portion thereof which
is surrendered. Any ISO or NSO or portion thereof which is surrendered
shall no longer be exercisable. The Committee, in its sole discretion, may
allow the Company to settle all or part of the Company's obligation arising
out of the exercise of a Tandem SAR by the payment of cash equal to the
aggregate Fair Market Value of the shares of Common Stock which the Company
would otherwise be obligated to deliver.
(b) NAKED SARS. Naked SARs shall terminate as provided in the
Participant's SAR agreement. The Committee may at the time of granting any
Naked SAR add such conditions and limitations to the Naked SAR as it shall
deem advisable, including but not limited to, limitations on the period
within which the Naked SAR shall be exercisable and the maximum amount of
appreciation to be recognized with regard to such Naked SAR.
(c) OTHER CONDITIONS. If a Participant is subject to Section 16(a)
and Section 16(b) of the Exchange Act, the Committee may at any time add
such additional conditions and limitations to such SAR which the Committee,
in its discretion, deems necessary or desirable in order to comply with
Section 16(a) or Section 16(b) of the Exchange Act and the rules and
regulations issued thereunder, or in order to obtain any exemption
therefrom. If a Participant subject to Section 16(a) or Section 16(b) of
the Exchange Act exercises a SAR and receives cash, the exercise must be
made or take effect during the ten-day period beginning on the third
business day after the release of quarterly or annual statements of sales
and earnings by the Company and ending on the twelfth business day after
such release of statements.
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9. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
The Committee, in its discretion, may grant Restricted Stock to any
Participant under the Plan. Each grant of Restricted Stock shall be evidenced
by an agreement between the Company and the Participant. All shares of Common
Stock awarded to Participants under the Plan as Restricted Stock shall be
subject to the following express terms and conditions and to such other terms
and conditions, not inconsistent with the Plan, as the Committee shall deem
appropriate:
(a) RESTRICTED PERIOD. Shares of Restricted Stock awarded to
Participants may not be sold, transferred, pledged or otherwise encumbered
before they vest. Subject to the provisions of subparagraphs (b) and (c)
below and any other restrictions imposed by law, any shares of Restricted
Stock that vest will be transferred to the Participant or, in the event of
his death, to the beneficiary or beneficiaries designated by writing filed
by the Participant with the Committee for such purpose or, if none, to his
estate. Delivery of shares in accordance with the preceding sentence shall
be made within the 30-day period after they vest.
(b) FORFEITURES. A Participant shall forfeit all unpaid accumulated
dividends and all shares of Restricted Stock which have not vested prior to
the date that his employment with the Company, or if a Director, his
membership on the Board, is terminated for any reason.
(c) CERTIFICATES DEPOSITED WITH COMPANY. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant and deposited with the Company.
Each such certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) relating to Restricted
Stock contained in the Ticketmaster Stock Plan and an
agreement entered into between the registered owner and
Ticketmaster Group, Inc. (f/k/a Ticketmaster Holdings Group,
Ltd.) Copies of such Plan and agreement are on file at the
principal office of Ticketmaster Group, Inc."
(d) STOCKHOLDER RIGHTS. Subject to the foregoing restrictions, each
Participant shall have all the rights of a stockholder with respect to his
shares of Restricted Stock including, but not limited to, the right to vote
such shares.
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(e) DIVIDENDS. On each Common Stock dividend payment date, each
Participant shall receive an amount equal to the dividend paid on that date
on a share of Common Stock, multiplied by his number of shares of
Restricted Stock.
10. TERMS AND CONDITIONS OF PHANTOM STOCK.
The Committee may, in its discretion, award Phantom Stock to any
Participant under the Plan. Each award of Phantom Stock shall be evidenced by
an agreement between the Company and the Participant. The Committee may at the
time of awarding any Phantom Stock add such additional conditions and
limitations to the Phantom Stock as it shall deem advisable, including, but not
limited to, the right for Participants to receive dividends equivalent to those
paid on Common Stock, limitations on the period or periods within which the
Phantom Stock may be surrendered, and the maximum amount of appreciation to be
recognized with regard to such Phantom Stock. If a Participant is subject to
Section 16(a) and Section 16(b) of the Exchange Act, the Committee may at any
time add such additional conditions and limitations to such Phantom Stock which,
in its discretion, the Committee deems necessary or desirable in order to comply
with Section 16(a) or Section 16(b) of the Exchange Act and the rules and
regulations issued thereunder, or in order to obtain any exemption therefrom.
An award of Phantom Stock shall entitle the Participant to whom it is awarded
the right to elect, so long as such Phantom Stock is vested and subject to such
limitations as the Committee shall have imposed, to surrender any then vested
portion of the Phantom Stock, in whole or in part, and receive from the Company
in exchange therefor the Fair Market Value on the date of surrender of the
Common Stock to which the surrendered Phantom Stock relates in cash or in shares
of Common Stock as the Committee may determine. If a Participant subject to
Section 16(a) or 16(b) of the Exchange Act receives cash in exchange for the
surrender of Phantom Stock, the surrender of such Phantom Stock must be made or
take effect during the ten-day period beginning on the third business day after
the release of quarterly or annual statements of sales and earnings by the
Company and ending on the twelfth business day after such release of statements.
11. DIRECTOR STOCK OPTIONS.
(a) Each Director who is not otherwise an employee of the Company or
the beneficial owner of 5% or more of the outstanding Common Stock and who
is a Director on August 21, 1996 shall automatically be granted as of that
date NSOs to purchase 75,000 shares of Common Stock having an exercise
price per share equal to $4.715 or, if the Company completes an initial
public offering of Common Stock prior to February 21, 1997, the price to
the public (as adjusted) for any intervening reverse stock split.
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<PAGE>
(b) Commencing with the date of the annual meeting of the
Shareholders of the Company scheduled to be held in 1997, or, if no annual
meeting of the Shareholders of the Company occurs on the scheduled date for
such meeting as specified in the Company's by-laws, and annually thereafter
each Director who is not otherwise an employee of the Company or the
beneficial owner of 5% or more of the outstanding Common Stock shall
automatically be granted NSOs to purchase 30,000 shares of Common Stock
having an exercise price per share equal to 100% of the Fair Market Value
of the Common Stock at the Option Date.
(c) An automatic Director NSO shall be granted hereunder only if as
of each Option Date the Director (i) is not otherwise an employee of the
Company or any subsidiary or affiliate, (ii) has not been an employee of
the Company or any subsidiary or affiliate for any part of the preceding
fiscal year, and (iii) has served on the Board continuously since the
commencement, prior to such Option Date, of his term.
(d) Paragraph (b) of this Section 11 shall not become effective and
no NSO's shall be automatically granted pursuant thereto until such time as
the Company's Common Stock has been sold pursuant to a public offering.
(e) Each NSO granted pursuant to this Section 11 shall
notwithstanding the provisions of Section 13, be 100% vested as of the
Option Date; provided, however, such NSO may not be exercised at any time
prior to six months after the Option Date. NSOs granted pursuant to this
Section 11 shall expire ten years from the Option Date.
(f) In the event that the number of shares of Common Stock available
for future grant under the Plan is insufficient to make all automatic
grants required to be made on such date, then all non-employee Directors
entitled to a grant on such date shall share ratably in the number of NSOs
shares available for grant under the Plan.
(g) The provisions of paragraph (b) of this Section 11 may not be
amended more often than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder. Except as expressly provided in this
Section 11, any NSO granted hereunder shall be subject to the terms and
conditions of the Plan if the grant were made pursuant to Section 7
hereof."
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12. MANNER OF EXERCISE OF OPTIONS.
To exercise an Option in whole or in part, a Participant (or, after the
Participant's death, the Participant's executor or administrator) must give
written notice to the Committee, stating the number of shares to which he
intends to exercise the Option. The Company will issue the shares with respect
to which the Option is exercised upon payment in full of the Option Price. The
Option Price may be paid in (i) cash, (ii) shares of Common Stock having an
aggregate Fair Market Value, as determined on the date of delivery, equal to the
Option Price, or (iii) by delivery of irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds necessary to
pay for all Common Stock acquired through such exercise and any tax withholding
obligations resulting from such exercise. The Option Price may be paid in
shares of Common Stock which were received by the Participant upon the exercise
of one or more Options. The Option Price may be paid in shares of Common Stock
which were received by the Participant as an award of Restricted Stock under the
Plan. The Option Price may be paid by surrender of Tandem SARs equal to the
Option Price.
13. VESTING.
A Participant may not exercise an Option or surrender a SAR or Phantom
Stock until it has become vested. The portion of an Option, SAR or Phantom
Stock award that is vested depends upon the period that has elapsed since the
Option Date. Unless the Committee establishes a different vesting schedule at
the time when an Option is granted or the Restricted Stock, SAR or Phantom Stock
is awarded, all Options granted under this Plan, Restricted Stock, SARs, and
Phantom Stock awarded under this Plan shall become 25% vested after 12 months
from the Option Date, and shall vest monthly pro rata over a period of 36 months
thereafter. Except as provided below or in Section 14, if a Participant
terminates his employment with the Company or its Subsidiaries if an employee,
his membership on the Board if a Director, or his retention as a consultant, for
any reason, he forfeits any Options, Restricted Stock, SARs and/or Phantom Stock
that are not yet vested. A transfer from the Company to a Subsidiary or
affiliate, or VICE VERSA is not a termination of employment for purposes of this
Plan. Unless the Committee in its sole discretion specifically waives the
application of this sentence, then notwithstanding the vesting schedule
contained herein or in the Participant's agreement, if the Participant's
employment or retention as a consultant, or if a Director, his membership on the
Board, is terminated for Cause all Options, SARs, Restricted Stock and/or
Phantom Stock granted or awarded to the Participant will be immediately
cancelled and forfeited by the Participant upon delivery to him of notice of
such termination.
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14. CHANGE OF CONTROL.
Notwithstanding the provisions of Section 13 or anything contained in a
Participant's agreement to the contrary, upon a Change in Control all Options,
Restricted Stock, SARs and/or Phantom Stock shall become 100% vested and
immediately exercisable.
15. ADJUSTMENTS TO REFLECT CHANGES IN CAPITAL STRUCTURE.
If there is any change in the corporate structure or shares of the Company,
the Board of Directors may make any adjustments necessary to prevent accretion,
or to protect against dilution, in the number and kind of shares authorized by
the Plan and, with respect to outstanding Options, Restricted Stock, Phantom
Stock and/or SARs, in the number and kind of shares covered thereby and in the
applicable Option Price. For the purpose of this Section 15, a change in the
corporate structure or shares of the Company includes, without limitation, any
change resulting from a recapitalization, stock split, stock dividend,
consolidation, rights offering, spin-off, reorganization, or liquidation and any
transaction in which shares of Common Stock are changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or another corporation.
16. NON-TRANSFERABILITY OF OPTIONS, SARS AND PHANTOM STOCK.
The Options and SARs granted or Phantom Stock awarded under the Plan are
not transferable, voluntarily or involuntarily, other than by will or the laws
of descent and distribution, or pursuant to a qualified domestic relations order
as defined in Section 414(p) of the Code. During a Participant's lifetime, his
Options may be exercised only by him.
17. RIGHTS AS STOCKHOLDER.
No Common Stock may be delivered upon the exercise of any Option until full
payment has been made. A Participant has no rights whatsoever as a stockholder
with respect to any shares covered by an Option until the date of the issuance
of a stock certificate for the shares. A Participant who has been granted SARs
or Phantom Stock shall have no rights whatsoever as a stockholder with respect
to such SARs or Phantom Stock.
18. WITHHOLDING TAX.
The Company shall have the right to withhold in cash or shares of Common
Stock with respect to any payments made to Participants under the Plan any taxes
required by law to be withheld because of such payments. With respect to a
Participant subject to Section 16(a) or 16(b), withholding made in Common Stock
upon the exercise of an Option, or the exercise of a SAR or Phantom Stock which
the Participant had the discretion regarding the timing of exercise,
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must be made or take effect during the period beginning on the third business
day following the release of quarterly or annual statements of sales and
earnings by the Company and ending on the twelfth business day after such
release of statements. Notwithstanding the foregoing, with respect to a
Participant subject to Section 16(a) or 16(b) of the Exchange Act, all
amounts required to be withheld upon either (i) the vesting of Restricted
Stock or (ii) the exercise of a SAR or surrender of Phantom Stock which had a
set duration and for which payment is made in Common Stock, shall
automatically be withheld in Common Stock otherwise deliverable to the
Participant and having a Fair Market Value determined on the date the income
is includable in the Participant's income equal to the amount of taxes
required to be withheld.
19. NO RIGHT TO EMPLOYMENT.
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company or any subsidiary, or any right or claim
to any benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
20. AMENDMENT OF THE PLAN.
The Committee may from time to time amend or revise the terms of this Plan
in whole or in part and may without limitation, adopt any amendment deemed
necessary; provided, however, that (a) no change in any award previously granted
to a Participant may be made that would impair the rights of the Participant
without the Participant's consent, (b) no amendment may extend the period during
which a Participant may exercise an ISO beyond the period set forth in Section
6(a)(ii) or 6(e), and (c) the Committee may not, without approval by the holders
of a majority of the shares of the Company's common stock present at a duly held
shareholders' meeting or otherwise represented and entitled to vote thereon, (i)
change the aggregate number of shares that may be sold pursuant to Options
granted under the Plan (except in accordance with the provisions of Section 15),
(ii) change the class of eligible individuals who may receive awards under the
Plan, (iii) adopt any amendment affecting the Option Price at which Options may
be granted, or (iv) materially increase benefits accruing to participants under
the Plan. If any amendment requiring shareholder approval for the Committee to
act under part (c) of the previous sentence is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 21.
21. SHAREHOLDER APPROVAL.
Continuance of the Plan shall be subject to approval by the shareholders of
the Company within 12 months before or after the
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date the Plan is adopted by the Committee in accordance with Rule 16b-3(b) of
the Exchange Act. If such shareholder approval is obtained at a duly held
shareholder's meeting, it may be obtained by the affirmative vote of the
holders of a majority of the shares of the Company's common stock present at
the meeting or represented and entitled to vote thereon.
22. CONDITIONS UPON ISSUANCE OF SHARES.
An Option shall not be exercisable, a share of Common Stock shall not be
issued pursuant to the exercise of an Option, and Restricted Stock shall not be
awarded until such time as the Plan has been approved by the Shareholders of the
Company and unless the award of Restricted Stock, exercise of such Option and
the issuance and delivery of such share pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares of Common stock may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Common Stock is being
purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
23. PARTICIPATION RIGHTS.
In the event of a sale of equity securities by or on behalf of one or more
of the Company's stockholders (in one transaction or series of transactions)
resulting in a Change in Control, Participants shall be given timely notice
thereof and shall have the right to surrender Options, Phantom Stock or SARs in
such sale and receive, on a pro rata basis, the amount as to which the Option,
Phantom Stock or SARs could be converted if such Option Phantom Stock or SAR was
exercised immediately prior to such transaction, less the Option Price.
24. EFFECTIVE DATE AND TERMINATION OF PLAN.
24.1 EFFECTIVE DATE. This amended and restated Plan is effective as of the
later of the date of its adoption by the Committee, or the date it is approved
by the shareholders of the Company, pursuant to Section 21.
24.2 TERMINATION OF THE PLAN. The Committee may terminate the Plan at any
time with respect to any shares that are not then subject to Options or
Restricted Stock. Termination of the Plan will not affect the rights and
obligations of any Participant with
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respect to Options, SARs, Phantom Stock or Restricted Stock awarded before
termination.
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EXHIBIT D
COVENANT NOT TO COMPETE
(Stock Repurchase Agreement)
THIS COVENANT NOT TO COMPETE (the "Agreement") is made and entered into
this 19th day of November, 1993, by and between TICKETMASTER HOLDINGS GROUP,
LTD., an Illinois corporation (the "Company"), and Fredric D. Rosen, an
individual ("Shareholder"), with reference to the following facts:
A. Pursuant to that certain Stock Repurchase Agreement of even date
herewith between the Company and Shareholder (the "Repurchase Agreement"), the
Company has repurchased all of the issued and outstanding Common Stock of the
Company (the "Shares") owned directly or indirectly by Shareholder. Absent this
agreement, the Company would have been unwilling to purchase the Shares under
the Repurchase Agreement. Capitalized terms otherwise not defined herein shall
have the meanings set forth in the Repurchase Agreement.
B. For purposes of this Agreement, the "Ticketmaster Businesses" shall
mean the computerized sale of tickets for sporting, theatrical, cinematic, live
theatrical, musical or any other events on behalf of various venues and
promoters through distribution channels currently being utilized by the Company
or any of its subsidiaries or affiliates (as defined in Rule 405 of Regulation C
promulgated under the Securities Act of 1933, as amended).
NOW, THEREFORE, based on the above premises and in consideration of
the repurchase by the Company of the Shares, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. COVENANT NOT TO COMPETE. For a period of three (3) years from and
after the date hereof, Shareholder will not, without the prior written consent
of the Company, directly or indirectly engage in or assist any activity which is
the same as, similar to, or competitive with the Ticketmaster Businesses (other
than on behalf of the Company or any of its subsidiaries or affiliates)
including, without limitation, whether such engagement or assistance is as an
officer, director, proprietor, employee, partner, investor (other than as a
holder of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative or
other participant, anywhere in the world that the Company or any of the
Ticketmaster Entities has been engaged , including without limitation, the
United States, Canada, Mexico, England, Ireland, Scotland, Europe and Australia.
Nothing herein shall limit Shareholder's ability to own interests in or manage
entities which sell tickets as an incidental part of their primary businesses
(e.g. cable networks, on-line computer services, sports teams, arenas, hotels,
cruise lines, theatrical and movie
<PAGE>
productions and the like) and which do not hold themselves out generally as
competitors of the Company and its subsidiaries.
2. SOLICITATION OF EMPLOYEES. For a period of three (3) years from and
after the date hereof, the Shareholder shall not (i) directly or indirectly
induce or attempt to induce any person then employed (whether part-time or
full-time) by the Company or any of its subsidiaries or affiliates whether as an
officer, employee, consultant, adviser or independent contractor, to leave the
employ of the Company or to cease providing or otherwise alter the services then
provided to the Company or to any of its subsidiaries or affiliates or (ii) in
any other manner seek to engage or employ any such person (whether or not for
compensation) as an officer, employee, consultant, adviser or independent
contractor in connection with the operation of any business which is the same as
or similar to any of the Ticketmaster Businesses.
3. NON-SOLICITATION OF CUSTOMERS. For a period of three (3) years from
and after the date hereof, Shareholder shall not solicit any customers of the
Company or any of its subsidiaries or affiliates or encourage any such
customers to use the facilities or services of any competitor of the Company or
any of its subsidiaries or affiliates. Customer shall mean any person who
engages the Company or any of its subsidiaries or affiliates to sell, on its
behalf as agent, tickets to the public.
4. PROPRIETARY INFORMATION. Shareholder will not at any time (during or
after the periods referred to above) disclose or use, except in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, any
proprietary information of the Company or other Ticketmaster Entity.
"Proprietary information of the Company or other Ticketmaster Entity" means all
information known or intended to be known only to employees of the Company or
any of its subsidiaries or affiliates in a confidential relationship with the
Company or any of its subsidiaries or affiliates relating to technical matters
pertaining to the business of the Company or other Ticketmaster Entities.
Shareholder agrees not to remove any documents, records or other information
from the premises of the Company or any of its subsidiaries or affiliates
containing any such proprietary information, except in the pursuit of the
business of the Company or any of its subsidiaries or affiliates and
acknowledges that such documents, records and other information are the
exclusive property of the Company or its subsidiaries and affiliates.
5. EQUITABLE RELIEF. Shareholder acknowledges that the covenants
contained in Sections 1 through 4 hereof are reasonable and necessary to protect
the legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into the Repurchase Agreement, that any
breach or threatened breach of such covenants will result in irreparable injury
to the Company and that the remedy at law for such breach or
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threatened breach would be inadequate. Accordingly, the Shareholder agrees that
the Company, in addition to any other rights or remedies which it may have,
shall be entitled to seek such equitable and injunctive relief as may be
available from any court of competent jurisdiction to restrain the Shareholder
from any breach or threatened breach of such covenants.
6. MISCELLANEOUS.
6.1 COMPLETE AGREEMENT; MODIFICATIONS. This Agreement and any
documents referred to herein or executed contemporaneously herewith constitute
the parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
6.2 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies
will not constitute a waiver of the right to pursue other available remedies.
6.3 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service, facsimile, telegram, telecopy or
certified mail (postage prepaid) to such address as may be designated from time
to time by the relevant party, and which will initially be as set forth below.
Any notice sent by certified mail will be deemed to have been given three ( 3)
days after the date on which it is mailed. All other notices will be deemed
given when received. No objection may be made to the manner of delivery of any
notice actually received in writing by an authorized agent of a party. Notices
will be addressed as follows or to such other address as the party to whom the
same is directed will have specified in conformity with the foregoing:
(i) If to the Shareholder:
c/o Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Telecopy No.: (213) 382-1146
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With a copy to:
Stephen J. Saft
Kleban & Samor, P.C.
2425 Post Road
Southport, Connecticut 06490
(ii) If to the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: General Counsel
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-1787
6.4 SUCCESSORS AND ASSIGNS. Except as provided herein to the
contrary, this Agreement will be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns. None of the parties
hereto may assign any of their rights or obligations under this Agreement
without the prior written consent of all other parties hereto.
6.5 GOVERNING LAW; JURISDICTION. All questions with respect to the
Agreement and the rights and liabilities of the parties will be governed by the
laws of the State of Illinois, regardless of the choice of law provisions of
that State or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard and determined before
an appropriate federal or state court located in Chicago, Illinois. The parties
hereto acknowledge that such court has the jurisdiction to interpret and enforce
the provisions of this Agreement and the parties waive any and all objections
that they may have as to personal jurisdiction or venue in any of the above
courts.
6.6 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time will be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment will be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
6.7 HEADINGS. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
-4-
<PAGE>
6.8 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect. Further, if the period of time, the extent of the
geographic area, or the scope of the prescribed activities covered by this
Agreement should be deemed unenforceable, then this Agreement shall be construed
to cover the maximum period of time, geographic area and scope of prescribed
activities (not to exceed the maximum time, geographic area or scope set forth
herein) as may be valid under applicable law and each of the parties hereto
shall request any court considering the enforceability of this Agreement to
construe and/or reform it so as to render it enforceable to the maximum extent
as provided above.
6.9 REPRESENTATION OF PARTIES. The parties hereto acknowledge that
they are sophisticated and have been represented by lawyers throughout this
transaction.
6.10 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
6.11 TERMINATION. Should the Company hereafter enter into any other
agreement with Shareholder providing a substantially identical covenant not to
compete with a term shorter than the three years provided herein or, under
certain circumstances, providing for less restrictive provisions or earlier
termination thereof, then such less restrictive provision or earlier termination
shall supersede and be substituted for the provisions and terms herein provided.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
---------------------------------
Fredric D. Rosen
TICKETMASTER HOLDINGS GROUP, LTD.
By:
------------------------------
Title:
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<PAGE>
EXHIBIT D
COVENANT NOT TO COMPETE
(Stock Repurchase Agreement)
THIS COVENANT NOT TO COMPETE (the "Agreement") is made and entered into
this 19th day of November, 1993, by and between TICKETMASTER HOLDINGS GROUP,
LTD., an Illinois corporation (the "Company"), and Robert A. Leonard, an
individual ("Shareholder"), with reference to the following facts:
A. Pursuant to that certain Stock Repurchase Agreement of even date
herewith between the Company and Shareholder (the "Repurchase Agreement"), the
Company has repurchased all of the issued and outstanding Common Stock of the
Company (the "Shares") owned directly or indirectly by Shareholder. Absent this
agreement, the Company would have been unwilling to purchase the Shares under
the Repurchase Agreement. Capitalized terms otherwise not defined herein shall
have the meanings set forth in the Repurchase Agreement.
B. For purposes of this Agreement, the "Ticketmaster Businesses" shall
mean the computerized sale of tickets for sporting, theatrical, cinematic, live
theatrical, musical or any other events on behalf of various venues and
promoters through distribution channels currently being utilized by the Company
or any of its subsidiaries or affiliates (as defined in Rule 405 of Regulation C
promulgated under the Securities Act of 1933, as amended).
NOW, THEREFORE, based on the above premises and in consideration of
the repurchase by the Company of the Shares, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. COVENANT NOT TO COMPETE. For a period of three (3) years from and
after the date hereof, Shareholder will not, without the prior written consent
of the Company, directly or indirectly engage in or assist any activity which is
the same as, similar to, or competitive with the Ticketmaster Businesses (other
than on behalf of the Company or any of its subsidiaries or affiliates)
including, without limitation, whether such engagement or assistance is as an
officer, director, proprietor, employee, partner, investor (other than as a
holder of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative or
other participant, anywhere in the world that the Company or any of the
Ticketmaster Entities has been engaged , including without limitation, the
United States, Canada, Mexico, England, Ireland, Scotland, Europe and Australia.
Nothing herein shall limit Shareholder's ability to own interests in or manage
entities which sell tickets as an incidental part of their primary businesses
(e.g. cable networks, on-line computer services, sports teams, arenas, hotels,
cruise lines, theatrical and movie
<PAGE>
productions and the like) and which do not hold themselves out generally as
competitors of the Company and its subsidiaries.
2. SOLICITATION OF EMPLOYEES. For a period of three (3) years from and
after the date hereof, the Shareholder shall not (i) directly or indirectly
induce or attempt to induce any person then employed (whether part-time or
full-time) by the Company or any of its subsidiaries or affiliates whether as an
officer, employee, consultant, adviser or independent contractor, to leave the
employ of the Company or to cease providing or otherwise alter the services then
provided to the Company or to any of its subsidiaries or affiliates or (ii) in
any other manner seek to engage or employ any such person (whether or not for
compensation) as an officer, employee, consultant, adviser or independent
contractor in connection with the operation of any business which is the same as
or similar to any of the Ticketmaster Businesses.
3. NON-SOLICITATION OF CUSTOMERS. For a period of three (3) years from
and after the date hereof, Shareholder shall not solicit any customers of the
Company or any of its subsidiaries or affiliates or encourage any such
customers to use the facilities or services of any competitor of the Company or
any of its subsidiaries or affiliates. Customer shall mean any person who
engages the Company or any of its subsidiaries or affiliates to sell, on its
behalf as agent, tickets to the public.
4. PROPRIETARY INFORMATION. Shareholder will not at any time (during or
after the periods referred to above) disclose or use, except in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, any
proprietary information of the Company or other Ticketmaster Entity.
"Proprietary information of the Company or other Ticketmaster Entity" means all
information known or intended to be known only to employees of the Company or
any of its subsidiaries or affiliates in a confidential relationship with the
Company or any of its subsidiaries or affiliates relating to technical matters
pertaining to the business of the Company or other Ticketmaster Entities.
Shareholder agrees not to remove any documents, records or other information
from the premises of the Company or any of its subsidiaries or affiliates
containing any such proprietary information, except in the pursuit of the
business of the Company or any of its subsidiaries or affiliates and
acknowledges that such documents, records and other information are the
exclusive property of the Company or its subsidiaries and affiliates.
5. EQUITABLE RELIEF. Shareholder acknowledges that the covenants
contained in Sections 1 through 4 hereof are reasonable and necessary to protect
the legitimate interests of the Company, that in the absence of such covenants
the Company would not have entered into the Repurchase Agreement, that any
breach or threatened breach of such covenants will result in irreparable injury
to the Company and that the remedy at law for such breach
-2-
<PAGE>
or threatened breach would be inadequate. Accordingly, the Shareholder agrees
that the Company, in addition to any other rights or remedies which it may have,
shall be entitled to seek such equitable and injunctive relief as may be
available from any court of competent jurisdiction to restrain the Shareholder
from any breach or threatened breach of such covenants.
6. MISCELLANEOUS.
6.1 COMPLETE AGREEMENT; MODIFICATIONS. This Agreement and any
documents referred to herein or executed contemporaneously herewith constitute
the parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
6.2 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies
will not constitute a waiver of the right to pursue other available remedies.
6.3 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service, facsimile, telegram, telecopy or
certified mail (postage prepaid) to such address as may be designated from time
to time by the relevant party, and which will initially be as set forth below.
Any notice sent by certified mail will be deemed to have been given three ( 3)
days after the date on which it is mailed. All other notices will be deemed
given when received. No objection may be made to the manner of delivery of any
notice actually received in writing by an authorized agent of a party. Notices
will be addressed as follows or to such other address as the party to whom the
same is directed will have specified in conformity with the foregoing:
(i) If to the Shareholder:
c/o Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Telecopy No.: (213) 382-1146
-3-
<PAGE>
With a copy to:
Stephen J. Saft
Kleban & Samor, P.C.
2425 Post Road
Southport, Connecticut 06490
(ii) If to the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: General Counsel
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-1787
6.4 SUCCESSORS AND ASSIGNS. Except as provided herein to the
contrary, this Agreement will be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns. None of the parties
hereto may assign any of their rights or obligations under this Agreement
without the prior written consent of all other parties hereto.
6.5 GOVERNING LAW; JURISDICTION. All questions with respect to the
Agreement and the rights and liabilities of the parties will be governed by the
laws of the State of Illinois, regardless of the choice of law provisions of
that State or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard and determined before
an appropriate federal or state court located in Chicago, Illinois. The parties
hereto acknowledge that such court has the jurisdiction to interpret and enforce
the provisions of this Agreement and the parties waive any and all objections
that they may have as to personal jurisdiction or venue in any of the above
courts.
6.6 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time will be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment will be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
6.7 HEADINGS. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
-4-
<PAGE>
6.8 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect. Further, if the period of time, the extent of the
geographic area, or the scope of the prescribed activities covered by this
Agreement should be deemed unenforceable, then this Agreement shall be construed
to cover the maximum period of time, geographic area and scope of prescribed
activities (not to exceed the maximum time, geographic area or scope set forth
herein) as may be valid under applicable law and each of the parties hereto
shall request any court considering the enforceability of this Agreement to
construe and/or reform it so as to render it enforceable to the maximum extent
as provided above.
6.9 REPRESENTATION OF PARTIES. The parties hereto acknowledge that
they are sophisticated and have been represented by lawyers throughout this
transaction.
6.10 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
6.11 TERMINATION. Should the Company hereafter enter into any other
agreement with Shareholder providing a substantially identical covenant not to
compete with a term shorter than the three years provided herein or, under
certain circumstances, providing for less restrictive provisions or earlier
termination thereof, then such less restrictive provision or earlier termination
shall supersede and be substituted for the provisions and terms herein provided.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
----------------------------------
Robert A. Leonard
TICKETMASTER HOLDINGS GROUP, LTD.
By:
-------------------------------
Title:
-5-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of December 15, 1993,
between Ticketmaster Holdings Group, Ltd., an Illinois corporation (the
"Company") and Paul Allen, an individual ("Shareholder").
R E C I T A L S
A. Pursuant to a Subscription Agreement dated as of November 20, 1993, as
amended (the "Subscription Agreement"), Shareholder purchased 36,699,041 shares
of the Company's common stock, or an aggregate of approximately 79.9% of the
Company's outstanding capital stock.
B. The parties hereto desire to set forth the respective rights of the
Company, and the Shareholder with respect to the registration of shares of
Common Stock owned by the Shareholder.
In consideration of the foregoing recitals and the mutual promises
contained herein, the parties hereto agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized terms shall have the
following meanings:
COMMON STOCK: The term Common Stock shall mean all shares now or
hereafter authorized of any class of common stock of the Company, and any equity
securities of the Company, howsoever designated, which has the right (subject
always to prior rights of any class or series of preferred shares) to
participate in the distribution of the assets and the earnings of the Company
without limit as to per share amount.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from
time to time.
HOLDER: Shareholder and his respective permitted assignees.
PERSON: An individual, partnership, corporation, trust or
unincorporated organization, or a government, or political subdivision thereof
or agency.
PROSPECTUS: The definitive prospectus included in any Registration
Statement (as hereinafter defined), as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement and by all other
amendments
<PAGE>
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
REGISTRABLE SECURITIES: Those shares of the Company's Common Stock
owned of record by the Shareholder on the date hereof (plus any shares received
from the Company with respect to or in replacement of such shares by reason of
splits, dividends and recapitalizations and other changes in the Company's
capital structure) but excluding any shares which have ceased to be "Restricted
Securities." Shares are no longer "Restricted Securities" when (i) they have
been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering such shares, or (ii) they
have been distributed to the public pursuant to Rule 144 or other comparable
provision under the Securities Act ("Rule 144").
REGISTRATION EXPENSES: See Section 6 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
filed under the Securities Act which covers Registrable Securities pursuant to
the provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended from time to
time.
SELLING HOLDERS: Holders of Registrable Securities who seek to sell
such securities under any Registration Statement.
2. REGISTRATION RIGHTS.
2.1 REGISTRATION UPON REQUEST.
(a) At any time after the earlier to occur of (i) three years after
the date hereof, (ii) 180 days (or such shorter period of time as provided for
in the applicable underwriting agreement) after the effective date of a
Registration Statement under the Securities Act respecting the initial public
offering of Common Stock of the Company (the "IPO") or (iii) the date upon which
such Common Stock is registered under Section 12 of the Exchange Act, the
Holders may request by written notice to the Company that the Company effect the
registration under the Securities Act of a number of Registrable Securities at
least equal to 5% of the Shares of the Common Stock issued and outstanding on
the date hereof, stating the intended method of disposition of such shares. The
-2-
<PAGE>
registration rights contemplated by this Section 2.1 may be exercised only four
times during the term of this Agreement; provided, however, the request for
registration shall not be deemed made if either (i) the Registration Statement
does not become effective under the Securities Act or a stop order, injunction
or other order interferes or prevents the contemplated method of distribution or
(ii) the number of Registrable Securities requested to be included in the
registration are reduced by virtue of Section 2.1(c). The registration rights
contemplated by this Section 2.1 cease to be exercisable once Holders, in the
aggregate, own less than 5% of the Common Stock issued and outstanding on the
date hereof.
(b) Upon receipt of such request, the Company shall, as expeditiously
as possible, prepare and file a Registration Statement with the SEC on an
appropriate form under the Securities Act with respect to all of the Registrable
Securities that Holders of such securities have requested that the Company
register, and use its best efforts to cause such Registration Statement to
become effective.
(c) In connection with any Registration Statement filed in response
to such request, the Company, at its option, may include a primary offering of
additional shares of its Common Stock and/or may include shares to be sold by
other shareholders of the Company; provided that if the managing underwriter of
such offering determines in good faith that the number of shares otherwise to be
included in the Registration Statement is such that the success of the
underwritten offering would be materially and adversely affected and,
accordingly, the total number of shares to be included in the Registration
Statement is reduced to the amount recommended by such underwriter, the
reduction shall be pro rata as to all shares designated for registration,
including shares to be offered by the Company or sold by other shareholders.
2.2 INCIDENTAL REGISTRATION.
(a) If at any time after the earlier to occur of (i) three years from
the date hereof, (ii) 180 days after the effective date of a Registration
Statement under the Securities Act respecting the initial public offering of its
Common Stock (or such shorter period of time as may be specified in the
applicable underwriting agreement respecting such IPO) or (iii) the date upon
which such Common Stock is registered under Section 12 of the Exchange Act or if
any other shareholder is being afforded an opportunity to register shares of
Common Stock, the Company proposes to register its Common Stock under the
Securities Act (except pursuant to a registration statement filed on Form S-8
or Form S-4 or such other form as shall be prescribed under the Securities Act
for the same purposes), it will at each such time give written notice to the
Holders as provided in Section 11.5
-3-
<PAGE>
hereof of its intention to do so. Within 20 days after receipt of such notice,
the Holders may request that the Company register all or part of the Registrable
Securities (but not less than 2% of the shares of the Common Stock issued and
outstanding on the date hereof), stating in such request the intended method of
distribution of such securities (the "Designated Securities"). Upon receipt of
such request, the Company shall use its best efforts to effect the registration
of the Designated Securities by including the Designated Securities in such
registration statement. The registration rights contemplated by this Section
2.2 shall terminate once Holders, in the aggregate own less than 5% of the
Common Stock issued and outstanding on the date hereof.
(b) In the event that securities of the same class as the Registrable
Securities are being registered by the Company in such Registration Statement
and such securities as well as any of the Designated Securities are to be
distributed in an underwritten offering, such Designated Securities shall be
included in such underwritten offering on the same terms and conditions as the
securities being issued by the Company for distribution pursuant to such
underwritten offering; PROVIDED, HOWEVER, that if the managing underwriter of
such underwritten offering reasonably determines in good faith and delivers to
the Holders a written opinion that the inclusion in such underwritten offering
of all the Designated Securities that the Holders indicated were to be
distributed pursuant to an underwritten offering would materially and adversely
affect the success of such underwritten offering, then the number of Designated
Securities to be included in the Registration Statement shall be reduced to the
amount recommended in good faith by and set forth in the opinion of such
managing underwriter; PROVIDED, FURTHER, that as to the Holders such reduction
shall be pro rata with respect to the Designated Securities with other Persons
holding contractual registration rights in such underwritten offering.
(c) No registration effected under this Section 2.2 shall relieve the
Company of its obligations to effect registrations at the request of the Holders
under Section 2.1.
3. HOLD-BACK AGREEMENTS.
3.1 RESTRICTIONS ON PUBLIC SALE BY HOLDERS. Each Holder whose Registrable
Securities are covered by a Registration Statement filed pursuant to Section 2
hereof agrees, if requested by managing underwriters in an underwritten
offering, not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such Registration
Statement, during the 90-day period beginning on the closing date with respect
to an initial public offering (and 60 days as to any subsequent offering), of
each underwritten offering made pursuant
-4-
<PAGE>
to such Registration Statement, to the extent timely notified in writing by the
managing underwriters.
3.2 RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The Company
agrees not to effect any public sale or distribution of its Common Stock,
including a sale pursuant to Regulation D under the Securities Act, during the
90-day period beginning on, the closing date of an underwritten offering made
pursuant to a Registration Statement filed under Section 2 hereof to the extent
timely notified in writing by the managing underwriters (except as part of such
underwritten registration or pursuant to registrations on Forms S-4 or S-8 or
any successor form to such Forms).
4. REGISTRATION PROCEDURES.
In connection with the Company's registration obligations pursuant to
Section 2 hereof, the Company will use its best efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company will as expeditiously as reasonably possible:
4.1 PREPARATION OF REGISTRATION STATEMENT. Prepare and file with the SEC,
within the time periods specified in Section 2, a Registration Statement on such
form as may be appropriate under the Securities Act, and use its best efforts to
cause such Registration Statement to become effective.
4.2 MAINTAINING EFFECTIVENESS. Prepare and file with the SEC such
amendments to the Registration Statement as may be necessary to keep such
Registration Statement effective for a period of not more than 180 days, or such
shorter period which will terminate when all Registrable Securities covered by
such Registration Statement have been sold.
4.3 NOTIFICATION. Notify the Selling Holders and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such advice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose, (iii) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (iv) of the happening of any event which makes any statement
made in the Registration Statement,
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<PAGE>
the Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement, the
Prospectus, or any document incorporated therein by reference so that they will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statement
therein not misleading.
4.4 STOP ORDERS. Make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement or the
qualification of any Registrable Securities for sale in any jurisdiction at the
earliest possible moment.
4.5 CONSULTATION WITH HOLDERS. Prior to the filing of any Registration
Statement or amendment thereto, provide copies of such document to the Selling
Holders and to the managing underwriters, if any, make Company's representatives
and Company's counsel available for discussion of such document and make such
changes in such document relating to the Selling Holders prior to the filing
thereof as such Selling Holders, counsel for such Selling Holders, or
underwriters may reasonably request.
4.6 COPIES OF REGISTRATION STATEMENTS. Furnish to each Selling Holder and
each managing underwriter, if any, without charge, at least one originally
executed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference).
4.7 PROSPECTUSES. Deliver to each Selling Holder and the underwriters, if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may reasonably request so long as the Registration Statement to which such
Prospectus or any amendment or supplement thereto relates is effective.
4.8 BLUE SKY LAWS. Prior to any public offering of Registrable
Securities, use its best efforts to register or qualify or cooperate with the
Selling Holders, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
within the United States as any Selling Holder or underwriter reasonably
requests, and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; PROVIDED that the Company will not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process or taxation in any such jurisdiction where it is not then so
subject.
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<PAGE>
4.9 AMENDMENTS UPON CHANGES. Upon the occurrence of any event
contemplated by Sections 4.3(ii), (iii) or (iv) or 4.4 above, prepare, as
promptly as practicable, a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading.
4.10 UNDERWRITING AGREEMENTS. Enter into such customary agreements
(including an underwriting agreement) and take all such other actions reasonably
required in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities.
4.11 COMPLIANCE WITH LAWS; SECTION 11(a). Otherwise use its best efforts
to comply with all applicable rules and regulations of the SEC, and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act no later than 45 days after
the end of each 12-month period (or within 90 days after the end of a fiscal
year.
5. SELLING HOLDERS' OBLIGATIONS.
5.1 PROVISION OF INFORMATION. The Company may require each Selling Holder
of Registrable Securities as to which any registration is being effected to
furnish to the Company such information regarding the distribution of such
securities by, and such other information relevant to, the Selling Holder for
inclusion in such Registration Statement, as the Company may from time to time
reasonably request in writing. Failure to comply with this requirement shall
excuse the Company from any further obligation to a Selling Holder to include
his or its shares in that Registration Statement.
5.2 DISCONTINUED USE OF PROSPECTUS. Each Holder of Registrable Securities
agrees by execution of this Agreement that, upon receipt of any written notice
from the Company of the happening of any event of the kind described in clauses
(ii), (iii) or (iv) of Section 4.3 or Section 4.4 hereof, such Holder will
forthwith discontinue disposition of Registrable Securities until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 4.9 hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
such Prospectus, and, if so directed by the Company such Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Holder's
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possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event the Company shall give any
such notice, the time period mentioned in Section 4.2 hereof shall be extended
by the number of days during the period from and including the date of the
giving of such notice to and including the date when each Selling Holder shall
have received the copies of the supplemental or amended Prospectus contemplated
by Section 4.9 hereof or the Advice.
6. REGISTRATION EXPENSES.
The Company shall bear all expenses other than Selling Holder Expenses
(defined below) incurred in connection with any Registration Statement,
including without limitation all registration and filing fees, fees with respect
to any filings required to be made with the National Association of Securities
Dealers, listing fees relative to any stock exchange or national market system,
fees and expenses of compliance with state securities or blue sky laws
(including reasonable fees and expenses of counsel for the underwriters in
connection therewith), printing expenses, fees and disbursements of counsel for
the Company, fees and disbursements of all independent public accountants of the
Company and all reasonable fees and expenses of counsel to the underwriters in
connection with state securities or blue sky matters. Each Selling Holder shall
bear his or its pro rata share of any Selling Holder Expenses. "Selling Holder
Expenses" shall consist of and be limited to (i) Selling Holder's legal costs,
including the fees and expenses of any counsel selected by the Selling Holder to
represent him or it, and (ii) the proportionate share of brokerage or
underwriting commissions attributable to Selling Holders' shares.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless each Holder of Registrable Securities, each Person who controls
any such Holder (within the meaning of the Securities Act or the Exchange Act)
(a "controlling person"), and each officer, director, employee and agent of each
Holder and each controlling person and each underwriter or selling agent (the
"indemnified parties") from and against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary prospectus or
any amendment or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as (i) the same are caused by
or contained in any information furnished in writing to the Company by such
Selling Holder, expressly for use therein, (ii) the Company has advised the
Holders' Representative in writing of a Section 4.3(iv) event and
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the Holder has sold Registrable Securities notwithstanding receipt of such
notice prior to receipt of a supplement or amended Prospectus pursuant to
Section 4.9 herein, or (iii) the same are caused by such Holder's failure, where
required, to deliver a copy of the Registration Statement or Prospectus after
the Company has furnished such Holder with a sufficient number of copies of the
same; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any preliminary Prospectus if (i) such Holder failed
to send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Registrable Securities and (ii) the
Prospectus would have corrected such untrue statement or omission; and provided
further, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, such Holder thereafter fails to deliver such Prospectus as so
amended or supplemented, prior to or concurrently with the sale of a Registrable
Security to the Person asserting such loss, claim, damage, liability or expense
who purchased such Registrable Security which is the subject thereof from such
Holder. The indemnity provided herein shall remain in full force and effect
regardless of any investigation made by or on behalf of an indemnified party and
shall survive the transfer of Registrable Securities by the Selling Holder.
7.2 INDEMNIFICATION BY HOLDERS. In connection with the Registration
Statements hereunder, each Selling Holder will furnish to the Company in writing
such information and affidavits as the Company reasonably requests relative to
such Holder and the plan of distribution for use in connection with the
Registration Statement or Prospectus and agrees to indemnify, to the full extent
permitted by law, the Company, and each Person who controls the Company (within
the meaning of the Securities Act or the Exchange Act) and each director,
officer, employee and agent of each such Person from and against any losses,
claims, damages, liabilities and expenses caused by any untrue statement of a
material fact or any omission of a material fact required to be stated in any
Registration Statement or Prospectus or preliminary prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or Prospectus. In no event,
however, shall
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the liability of any Selling Holder hereunder be greater in amount than the
dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. The
Company shall be obligated to give to, and shall be entitled to receive from,
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution customary indemnities.
7.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person or (c) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest may exist between such Person and the indemnifying party with respect
to such claims or such Person may have separate or additional defenses (in which
case, if the Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such Person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld). No indemnifying party will consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one principal and one local
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party, a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
7.4 CONTRIBUTION. If the indemnification provided for in Sections 7.1 or
7.2 is unavailable to the indemnified parties in respect of any losses, claims,
damages or liabilities referred to
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herein, then each such indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(i) as between the Company and the Selling Holders on the one hand and the
underwriters on the other hand, in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Holders on the one
hand and the underwriters on the other hand from the offering of all of the
securities sold in the offering, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Company and the Selling
Holders on the one hand and of the underwriters on the other hand in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations and
(ii) as between the Company on the one hand and each Selling Holder on the other
hand, in such proportion as is appropriate to reflect the relative fault of the
Company and of each Selling Holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Holders on the one hand and the
underwriters on the other hand shall be deemed to be in the same proportion as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and the
Selling Holders bear to the total underwriting discounts and commissions
received by the underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Selling
Holders or by the underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject
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to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 7.4,
no underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Common Stock underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the securities of such Selling Holder
were offered to the public exceeds the amount of any damages which such Selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Selling Holders' obligations
to contribute pursuant to this Section 7.4 are several in proportion to the
proceeds of the offering received by each Selling Holder bears to the total
proceeds of the offering received by all the Selling Holders and not joint.
8. SELECTION OF UNDERWRITERS.
In connection with any request for registration under Section 2.1 hereof,
the Company shall be entitled to select the managing underwriter if it is the
initial public offering of the Common Stock or if it is also registering shares
on its own behalf. The Selling Holders, however, shall be entitled to select
the co-managing underwriter. If the Registration Statement covers only shares
being sold by the Selling Holders, then (unless it is the initial public
offering of the Company's Common Stock) the Selling Holders shall be entitled to
select the managing underwriter, subject to approval by the Company, which
approval shall not be unreasonably withheld. In connection with any
registration under Section 2.2, the Selling Holders shall have no right to
select underwriters.
9. RULE 144.
The Company covenants that, after it has filed a registration pursuant to
Section 12 of the Exchange Act or a registration statement under the Securities
Act becomes effective, it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder, and it will take such further action as may be reasonably
and customarily requested by any Holder of Registrable Securities, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration
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under the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
information and requirements.
10. TERMINATION.
The Holders shall have no further rights under this Agreement at any time
after the time as the Holders collectively fail to own Registrable Securities of
an amount at least equal to 5% of the issued and outstanding Common Stock of the
Company on the date hereof.
11. MISCELLANEOUS.
11.1 REMEDIES. In the event of a breach by the Company of its obligations
under this Agreement, each Holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby waives the defense in any action for
specific performance that a remedy at law would be adequate.
11.2 NO INCONSISTENT AGREEMENTS. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities which
is inconsistent with or limits or impairs the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof.
11.3 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not
take any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
11.4 AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Holders of at least
a majority of the number of outstanding Registrable Securities.
11.5 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by
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hand-delivery, registered first-class mail, air courier guaranteeing overnight
delivery, telex or telecopier:
(a) if to a Holder, to such Holder at the most current address given
by it to the Company in accordance with the provisions of this Section 11.5,
which address initially is the address set forth beneath Shareholder's name on
the signature page of this Agreement; and
(b) if to the Company, initially at the address set forth on the
signature page of this Agreement as the address of the Company and thereafter
at such other address, notice of which is given to the Holders in accordance
with the provisions of this Section 11.5.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; two business days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt acknowledged, if telecopied; and on the next business
day if timely delivered to an air courier guaranteeing overnight delivery.
11.6 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns, heirs, beneficiaries and personal
representatives of each of the parties, including without limitation and without
the need for an express assignment, subsequent Holders of Registrable
Securities.
11.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.8 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois regardless of the
choice of law provisions of Illinois or any other jurisdiction.
11.10 SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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11.11 ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities now or hereafter owned by Shareholder. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
11.12 ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof or thereof is validly
asserted as a defense, the successful party shall be entitled to recover, and
the court shall award, reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
TICKETMASTER HOLDINGS GROUP, LTD.
6th Floor
3701 Wilshire Blvd.
Los Angeles, California 90010
By:
---------------------------------
Name:
----------------------------
Its:
----------------------------
PAUL ALLEN
c/o William D. Savoy
Vulcan Northwest, Inc.
13810 S.E. Eastgate Way
Suite 480
Bellevue, Washington 98005-4442
-------------------------------------
Paul Allen
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REGISTRATION AND EXCHANGE RIGHTS AGREEMENT
This REGISTRATION AND EXCHANGE RIGHTS AGREEMENT is dated as of December 15,
1993, among Ticketmaster Holdings Group, Ltd., an Illinois corporation (the
"Company"), HG, Inc., a Delaware corporation ("HG"), and the other signatories
to this agreement (collectively, together with HG, referred to herein as the
"Shareholders").
R E C I T A L S
A. Pursuant to a Subscription Agreement dated as of November 20, 1993, as
amended (the "Subscription Agreement"), the Company is selling to Paul Allen
("Allen") shares of its common stock which (when added to the shares being
concurrently issued by the Company to Fredric D. Rosen pursuant to the Movie Tix
Agreement) will equal 79.9% of the Company's outstanding capital stock.
B. The Shareholders collectively own 45,931,215 shares of Common Stock.
C. The parties hereto desire to set forth the respective rights of the
Company, HG, and the Shareholders with respect to the registration of shares of
Common Stock owned by the Shareholders.
In consideration of the foregoing recitals and the mutual promises
contained herein, the parties hereto agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized terms shall have the
following meanings:
COMMON STOCK: The term Common Stock shall mean all shares now or
hereafter authorized of any class of common stock of the Company, and any equity
securities of the Company, howsoever designated, which has the right (subject
always to prior rights of any class or series of preferred shares) to
participate in the distribution of the assets and the earnings of the Company
without limit as to per share amount.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from
time to time.
HOLDER: Each of the Shareholders and their respective permitted
assignees.
<PAGE>
HOLDERS' REPRESENTATIVE: HG or such other Person as shall be
appointed such by written consent of the Holders in accordance with Section 12.
PERSON: An individual, partnership, corporation, trust or
unincorporated organization, or a government, or political subdivision thereof
or agency.
PROSPECTUS: The definitive prospectus included in any Registration
Statement (as hereinafter defined), as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
REGISTRABLE SECURITIES: Those shares of the Company's Common Stock
owned of record by the Shareholders on the date hereof (plus any shares received
from the Company with respect to or in replacement of such shares by reason of
splits, dividends and recapitalizations and other changes in the Company's
capital structure) but excluding any shares which have ceased to be "Restricted
Securities." Shares are no longer "Restricted Securities" when (i) they have
been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering such shares, or (ii) they
have been distributed to the public pursuant to Rule 144 or other comparable
provision under the Securities Act ("Rule 144").
REGISTRATION EXPENSES: See Section 6 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
filed under the Securities Act which covers Registrable Securities pursuant to
the provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended from time to
time.
SELLING HOLDERS: Holders of Registrable Securities who seek to sell
such securities under any Registration Statement.
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2. REGISTRATION RIGHTS.
2.1 REGISTRATION UPON REQUEST.
(a) At any time after the earlier to occur of (i) three years after
the date hereof, (ii) 180 days (or such shorter period of time as provided for
in the applicable underwriting agreement) after the effective date of a
Registration Statement under the Securities Act respecting the initial public
offering of Common Stock of the Company (the "IPO") or (iii) the date upon which
such Common Stock is registered under Section 12 of the Exchange Act, the
Holders' Representative may request by written notice to the Company that the
Company effect the registration under the Securities Act of a number of
Registrable Securities at least equal to 5% of the Shares of the Common Stock
issued and outstanding on the date hereof, stating the intended method of
disposition of such shares. The registration rights contemplated by this
Section 2.1 may be exercised only twice during the term of this Agreement;
provided, however, the request for registration shall not be deemed made if
either (i) the Registration Statement does not become effective under the
Securities Act or a stop order, injunction or other order interferes or prevents
the contemplated method of distribution, (ii) the number of Registrable
Securities requested to be included in the registration are reduced by virtue of
Section 2.1(c) or (iii) the Registration Statement includes shares owned by
Allen pursuant to Section 2.1(c), and Allen exercises his right under Section 8
hereof to designate the managing underwriter. The registration rights
contemplated by this Section 2.1 cease to be exercisable once Holders, in the
aggregate, own less than 5% of the Common Stock issued and outstanding on the
date hereof.
(b) Upon receipt of such request, the Company shall, as expeditiously
as possible, prepare and file a Registration Statement with the SEC on an
appropriate form under the Securities Act with respect to all of the Registrable
Securities that Holders of such securities have requested that the Company
register, and use its best efforts to cause such Registration Statement to
become effective.
(c) In connection with any Registration Statement filed in response
to such request, the Company, at its option, may include a primary offering of
additional shares of its Common Stock and/or may include shares to be sold by
other shareholders of the Company, including Allen; provided that if the
managing underwriter of such offering determines in good faith that the number
of shares otherwise to be included in the Registration Statement is such that
the success of the underwritten offering would be materially and adversely
affected and, accordingly, the total number of shares to be included in the
Registration Statement is reduced to the amount recommended by such underwriter,
the reduction shall be pro rata as
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to all shares designated for registration, including shares to be offered by the
Company or sold by other shareholders.
2.2 INCIDENTAL REGISTRATION.
(a) If at any time after the earlier to occur of (i) three years from
the date hereof, (ii) 180 days after the effective date of a Registration
Statement under the Securities Act respecting the initial public offering of its
Common Stock (or such shorter period of time as may be specified in the
applicable underwriting agreement respecting such IPO) or (iii) the date upon
which such Common Stock is registered under Section 12 of the Exchange Act, the
Company proposes to register its Common Stock or if any other shareholder is
being afforded an opportunity to register shares of Common Stock under the
Securities Act (except pursuant to a registration statement filed on Form S-8
or Form S-4 or such other form as shall be prescribed under the Securities Act
for the same purposes), it will at each such time give written notice to the
Holders' Representative as provided in Section 13.5 hereof of its intention to
do so. Within 20 days after receipt of such notice, the Holders' Representative
may request that the Company register all or part of the Registrable Securities
(but not less than 2% of the shares of the Common Stock issued and outstanding
on the date hereof), stating in such request the intended method of distribution
of such securities (the "Designated Securities"). Upon receipt of such request,
the Company shall use its best efforts to effect the registration of the
Designated Securities by including the Designated Securities in such
registration statement. The registration rights contemplated by this Section
2.2 shall terminate once Holders, in the aggregate own less than 5% of the
Common Stock issued and outstanding on the date hereof.
(b) In the event that securities of the same class as the Registrable
Securities are being registered by the Company in such Registration Statement
and such securities as well as any of the Designated Securities are to be
distributed in an underwritten offering, such Designated Securities shall be
included in such underwritten offering on the same terms and conditions as the
securities being issued by the Company for distribution pursuant to such
underwritten offering; PROVIDED, HOWEVER, that if the managing underwriter of
such underwritten offering reasonably determines in good faith and delivers to
the Holders' Representative a written opinion that the inclusion in such
underwritten offering of all the Designated Securities that the Holders
indicated were to be distributed pursuant to an underwritten offering would
materially and adversely affect the success of such underwritten offering, then
the number of Designated Securities to be included in the Registration Statement
shall be reduced to the amount recommended in good faith by and set forth in the
opinion of such managing underwriter; PROVIDED, FURTHER, that as to the Holders
such
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reduction shall be pro rata with respect to the Designated Securities with other
Persons holding contractual registration rights in such underwritten offering.
(c) No registration effected under this Section 2.2 shall relieve the
Company of its obligations to effect registrations at the request of the
Holders' Representatives under Section 2.1.
3. HOLD-BACK AGREEMENTS.
3.1 RESTRICTIONS ON PUBLIC SALE BY HOLDERS. Each Holder whose Registrable
Securities are covered by a Registration Statement filed pursuant to Section 2
hereof agrees, if requested by managing underwriters in an underwritten
offering, not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such Registration
Statement, during the 90-day period beginning on the closing date with respect
to an initial public offering (and 60 days as to any subsequent offering), of
each underwritten offering made pursuant to such Registration Statement, to the
extent timely notified in writing by the managing underwriters.
3.2 RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The Company
agrees not to effect any public sale or distribution of its Common Stock,
including a sale pursuant to Regulation D under the Securities Act, during the
90-day period beginning on, the closing date of an underwritten offering made
pursuant to a Registration Statement filed under Section 2 hereof to the extent
timely notified in writing by the managing underwriters (except as part of such
underwritten registration or pursuant to registrations on Forms S-4 or S-8 or
any successor form to such Forms).
4. REGISTRATION PROCEDURES.
In connection with the Company's registration obligations pursuant to
Section 2 hereof, the Company will use its best efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company will as expeditiously as reasonably possible:
4.1 PREPARATION OF REGISTRATION STATEMENT. Prepare and file with the SEC,
within the time periods specified in Section 2, a Registration Statement on such
form as may be appropriate under the Securities Act, and use its best efforts to
cause such Registration Statement to become effective.
4.2 MAINTAINING EFFECTIVENESS. Prepare and file with the SEC such
amendments to the Registration Statement as may be necessary to keep such
Registration Statement effective for a period of not
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more than 180 days, or such shorter period which will terminate when all
Registrable Securities covered by such Registration Statement have been sold.
4.3 NOTIFICATION. Notify the Selling Holders and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such advice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose, (iii) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (iv) of the happening of any event which makes any statement
made in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus, or any document incorporated therein by
reference so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statement therein not misleading.
4.4 STOP ORDERS. Make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement or the
qualification of any Registrable Securities for sale in any jurisdiction at the
earliest possible moment.
4.5 CONSULTATION WITH HOLDERS. Prior to the filing of any Registration
Statement or amendment thereto, provide copies of such document to the Selling
Holders and to the managing underwriters, if any, make Company's representatives
and Company's counsel available for discussion of such document and make such
changes in such document relating to the Selling Holders prior to the filing
thereof as such Selling Holders, counsel for such Selling Holders, or
underwriters may reasonably request.
4.6 COPIES OF REGISTRATION STATEMENTS. Furnish to each Selling Holder and
each managing underwriter, if any, without charge, at least one originally
executed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference).
4.7 PROSPECTUSES. Deliver to each Selling Holder and the underwriters, if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any
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amendment or supplement thereto as such Persons may reasonably request so long
as the Registration Statement to which such Prospectus or any amendment or
supplement thereto relates is effective.
4.8 BLUE SKY LAWS. Prior to any public offering of Registrable
Securities, use its best efforts to register or qualify or cooperate with the
Selling Holders, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
within the United States as any Selling Holder or underwriter reasonably
requests, and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; PROVIDED that the Company will not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process or taxation in any such jurisdiction where it is not then so
subject.
4.9 AMENDMENTS UPON CHANGES. Upon the occurrence of any event
contemplated by Sections 4.3(ii), (iii) or (iv) or 4.4 above, prepare, as
promptly as practicable, a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading.
4.10 UNDERWRITING AGREEMENTS. Enter into such customary agreements
(including an underwriting agreement) and take all such other actions reasonably
required in connection therewith in order to expedite or facilitate the
disposition of such Registrable Securities.
4.11 COMPLIANCE WITH LAWS; SECTION 11(A). Otherwise use its best efforts
to comply with all applicable rules and regulations of the SEC, and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act no later than 45 days after
the end of each 12-month period (or within 90 days after the end of a fiscal
year.
5. SELLING HOLDERS' OBLIGATIONS.
5.1 PROVISION OF INFORMATION. The Company may require each Selling Holder
of Registrable Securities as to which any registration is being effected to
furnish to the Company such information regarding the distribution of such
securities by, and
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such other information relevant to, the Selling Holder for inclusion in such
Registration Statement, as the Company may from time to time reasonably request
in writing. Failure to comply with this requirement shall excuse the Company
from any further obligation to a Selling Holder to include his or its shares in
that Registration Statement.
5.2 DISCONTINUED USE OF PROSPECTUS. Each Holder of Registrable Securities
agrees by execution of this Agreement that, upon receipt of any written notice
from the Company of the happening of any event of the kind described in clauses
(ii), (iii) or (iv) of Section 4.3 or Section 4.4 hereof, such Holder will
forthwith discontinue disposition of Registrable Securities until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 4.9 hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
such Prospectus, and, if so directed by the Company such Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period mentioned in
Section 4.2 hereof shall be extended by the number of days during the period
from and including the date of the giving of such notice to and including the
date when each Selling Holder shall have received the copies of the supplemental
or amended Prospectus contemplated by Section 4.9 hereof or the Advice.
6. REGISTRATION EXPENSES.
The Company shall bear all expenses other than Selling Holder Expenses
(defined below) incurred in connection with any Registration Statement,
including without limitation all registration and filing fees, fees with respect
to any filings required to be made with the National Association of Securities
Dealers, listing fees relative to any stock exchange or national market system,
fees and expenses of compliance with state securities or blue sky laws
(including reasonable fees and expenses of counsel for the underwriters in
connection therewith), printing expenses, fees and disbursements of counsel for
the Company, fees and disbursements of all independent public accountants of the
Company and all reasonable fees and expenses of counsel to the underwriters in
connection with state securities or blue sky matters. Each Selling Holder shall
bear his or its pro rata share of any Selling Holder Expenses. "Selling Holder
Expenses" shall consist of and be limited to (i) Selling Holder's legal costs,
including the fees and expenses of any counsel selected by the Selling Holder to
represent him or it, and (ii) the proportionate
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share of brokerage or underwriting commissions attributable to Selling Holders'
shares.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless each Holder of Registrable Securities, each Person who controls
any such Holder (within the meaning of the Securities Act or the Exchange Act)
(a "controlling person"), and each officer, director, employee and agent of each
Holder and each controlling person and each underwriter or selling agent (the
"indemnified parties") from and against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary prospectus or
any amendment or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as (i) the same are caused by
or contained in any information furnished in writing to the Company by such
Selling Holder, expressly for use therein, (ii) the Company has advised the
Holders' Representative in writing of a Section 4.3(iv) event and the Holder has
sold Registrable Securities notwithstanding receipt of such notice prior to
receipt of a supplement or amended Prospectus pursuant to Section 4.9 herein,
or (iii) the same are caused by such Holder's failure, where required, to
deliver a copy of the Registration Statement or Prospectus after the Company has
furnished such Holder with a sufficient number of copies of the same; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary Prospectus if (i) such Holder failed to
send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Registrable Securities and (ii) the
Prospectus would have corrected such untrue statement or omission; and provided
further, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, such Holder thereafter fails to deliver such Prospectus as so
amended or supplemented, prior to or concurrently with the sale of a Registrable
Security to the Person asserting such loss, claim, damage, liability or expense
who purchased such Registrable Security which is the subject thereof from such
Holder. The indemnity provided herein shall remain in full force and effect
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regardless of any investigation made by or on behalf of an indemnified party and
shall survive the transfer of Registrable Securities by the Selling Holder.
7.2 INDEMNIFICATION BY HOLDERS. In connection with the Registration
Statements hereunder, each Selling Holder will furnish to the Company in writing
such information and affidavits as the Company reasonably requests relative to
such Holder and the plan of distribution for use in connection with the
Registration Statement or Prospectus and agrees to indemnify, to the full extent
permitted by law, the Company, and each Person who controls the Company (within
the meaning of the Securities Act or the Exchange Act) and each director,
officer, employee and agent of each such Person from and against any losses,
claims, damages, liabilities and expenses caused by any untrue statement of a
material fact or any omission of a material fact required to be stated in any
Registration Statement or Prospectus or preliminary prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or Prospectus. In no event,
however, shall the liability of any Selling Holder hereunder be greater in
amount than the dollar amount of the proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation. The Company shall be obligated to give to, and shall be entitled to
receive from, underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution customary
indemnities.
7.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person or (c) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest may exist between such Person and the indemnifying party with respect
to such claims or such Person may have separate or additional defenses (in which
case, if the Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right
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to assume the defense of such claim on behalf of such Person). If such defense
is not assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its consent (but such
consent will not be unreasonably withheld). No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one principal and one local counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels.
7.4 CONTRIBUTION. If the indemnification provided for in Sections 7.1 or
7.2 is unavailable to the indemnified parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (i) as between the Company and the Selling Holders on the one
hand and the underwriters on the other hand, in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Holders on the one hand and the underwriters on the other hand from the
offering of all of the securities sold in the offering, or if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
the Selling Holders on the one hand and of
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the underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations and (ii) as between the Company
on the one hand and each Selling Holder on the other hand, in such proportion as
is appropriate to reflect the relative fault of the Company and of each Selling
Holder in connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Selling Holders on the one hand and the underwriters on the
other hand shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and the Selling Holders bear to the
total underwriting discounts and commissions received by the underwriters, in
each case as set forth in the table on the cover page of the prospectus. The
relative fault of the Company and the Selling Holders on the one hand and of the
underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Holders or by the underwriters. The
relative fault of the Company on the one hand and of each Selling Holder on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7.4, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Common Stock underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Selling Holders' obligations to contribute pursuant to
this Section 7.4 are several in proportion to the proceeds of the offering
received by each Selling Holder bears to the total proceeds of the offering
received by all the Selling Holders and not joint.
8. SELECTION OF UNDERWRITERS.
In connection with any request for registration under Section 2.1 hereof,
the Company shall be entitled to select the managing underwriter if it is the
initial public offering of the Common
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Stock or if it is also registering shares on its own behalf. If Allen elects to
include shares of Common Stock owned by him or his Affiliates in a registration
effected under Section 2.1, he shall be entitled to select the managing
underwriter, subject to the provisions of Section 2.1(a). In either such event,
the Selling Holders shall be entitled to select the co-managing underwriter. If
the Registration Statement covers only shares being sold by the Selling Holders,
then (unless it is the initial public offering of the Company's Common Stock)
the Selling Holders shall be entitled to select the managing underwriter,
subject to approval by the Company, which approval shall not be unreasonably
withheld. In connection with any registration under Section 2.2, the Selling
Holders shall have no right to select underwriters.
9. RULE 144.
The Company covenants that, after it has filed a registration pursuant to
Section 12 of the Exchange Act or a registration statement under the Securities
Act becomes effective, it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder, and it will take such further action as may be reasonably
and customarily requested by any Holder of Registrable Securities, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any Holder of Registrable
Securities, the Company will deliver to such Holder a written statement as to
whether it has complied with such information and requirements.
10. EXCHANGE NOTES.
10.1 RIGHT TO EXCHANGE. If the Holders have made a proper demand for
registration under Section 2.1 of this Agreement prior to the IPO and the
Company has not caused a registration statement relating to the shares subject
to such demand to be filed with the SEC under the Securities Act within 90 days
following such demand, the Holders may by written notice to the Company, require
the Company to exchange such shares for notes of the Company (the "Exchange
Notes") having the terms and conditions provided in Schedule A hereto and such
additional terms and conditions as are customary for such securities and not
inconsistent with the foregoing. Any such notice may be delivered by the
Holders only once and may no longer be given if, prior to such notice, the
Company has caused the shares to be registered under the Securities Act.
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10.2 ISSUANCE OF EXCHANGE NOTES. Upon receipt of any such notice for
Exchange Notes, the Company shall forthwith, upon surrender of the shares, issue
Exchange Notes having an aggregate principal amount equal to the fair market
value of the shares so surrendered. For purposes of this Agreement, "fair
market value" shall be determined without discount for illiquidity or minority
status by agreement of the parties, or if the parties are unable to agree on
fair market value, by a nationally recognized investment banking firm selected
by the parties. If the parties are unable to agree on the investment banking
firm to be used for such evaluation, then each of the parties (the Company on
the one hand and the Holders acting through the Holders' Representative on the
other hand) shall each select a nationally recognized investment banking firm
which firms shall in turn select a third investment banking firm, which firm
shall establish the fair market value of the shares.
11. TERMINATION.
The Holders shall have no further rights under this Agreement at any time
after the time as the Holders collectively fail to own Registrable Securities of
an amount at least equal to 5% of the issued and outstanding Common Stock of the
Company on the date hereof.
12. HOLDERS' REPRESENTATIVE.
Each of the Holders, by execution of this Agreement or by acquisition of
the shares, hereby appoints HG, Inc. as its representative to make and receive
all notices, requests, demands and communications to or from the Company with
respect to all matters relating hereto, with the same force and effect as if
given or received personally by or to each Holder. If at any time HG, Inc.
resigns or otherwise is unavailable to act as the Holders' Representative, a
successor Holders' Representative may be appointed by the written consent of
Holders then owning more than 50% of the remaining registrable securities.
Except as provided herein, no other Holder may act with respect to this
Agreement other than through the Holders' Representative. Holders'
Representative hereby agrees to use its reasonable best efforts to distribute or
convey, as the case may be, promptly to each of the Holders all notices,
requests, demands and communications to or from the Company made or received by
Holders' Representative hereunder.
13. MISCELLANEOUS.
13.1 REMEDIES. In the event of a breach by the Company of its obligations
under this Agreement, each Holder of Registrable Securities, in addition to
being entitled to exercise all rights
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granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
waives the defense in any action for specific performance that a remedy at law
would be adequate.
13.2 NO INCONSISTENT AGREEMENTS. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities which
is inconsistent with or limits or impairs the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. The Company
has not previously entered into and is not still bound by any agreement with
respect to its securities granting any registration rights to any Person.
13.3 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will not
take any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
13.4 AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Holders of at least
a majority of the number of outstanding Registrable Securities.
13.5 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, air courier guaranteeing overnight delivery, telex or
telecopier:
(a) if to a Holder, to the Holders' Representative at the most
current address given by it to the Company in accordance with the provisions of
this Section 13.5, which address initially is the address set forth beneath HG's
name on the signature page of this Agreement; and
(b) if to the Company, initially at the address set forth on the
signature page of this Agreement as the address of the Company and thereafter
at such other address, notice of which is given to the Holders' Representative
in accordance with the provisions of this Section 13.5.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; two business days after
being deposited in the mail,
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postage prepaid, if mailed; when answered back, if telexed; and when receipt
acknowledged, if telecopied; and on the next business day if timely delivered to
an air courier guaranteeing overnight delivery.
13.6 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns, heirs, beneficiaries and personal
representatives of each of the parties, including without limitation and without
the need for an express assignment, subsequent Holders of Registrable
Securities.
13.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
13.8 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
13.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois regardless of the
choice of law provisions of Illinois or any other jurisdiction.
13.10 SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
13.11 ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities now or hereafter owned by the Stockholders. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
13.12 ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof or thereof is validly
asserted as a defense, the successful party shall be entitled to recover, and
the court shall award, reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
THE COMPANY:
TICKETMASTER HOLDINGS GROUP, LTD.
6th Floor
3701 Wilshire Blvd.
Los Angeles, California 90010
By:_________________________
Name:____________________
Its: ____________________
SHAREHOLDERS:
HG, INC.
200 West Madison, 38th Floor
Chicago, Illinois 60606
By:_________________________
Name:____________________
Its: ____________________
WELLS FARGO & COMPANY
444 Market Street
17th Floor
San Francisco, CA 94164
By:_________________________
Name:____________________
Its: ____________________
_____________________________
RICHARD L. SCHULZE
200 West Madison, 38th Floor
Chicago, Illinois 60606
_____________________________
HAROLD S. HANDELSMAN
200 West Madison, 38th Floor
Chicago, Illinois 60606
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ROCKWOOD & CO.
200 West Madison, 38th Floor
Chicago, Illinois 60606
By:_________________________
Name:____________________
Its: ____________________
_____________________________
FREDRIC ROSEN
3701 Wilshire Boulevard
6th Floor
Los Angeles, California 90010
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SCHEDULE A
TICKETMASTER HOLDINGS GROUP, LTD.
SENIOR NOTES ISSUABLE IN EXCHANGE
FOR REGISTRABLE SECURITIES
ISSUE: Senior Notes
ISSUER: Ticketmaster Holdings Group, Ltd.
PRINCIPAL AMOUNT: The appraised value of the Registrable Securities as defined
in the Registration and Exchange Rights Agreement being
exchanged for Senior Notes as determined by a recognized
national investment banking firm acceptable to Ticketmaster
Holdings Group, Ltd. and HG, Inc. ("Banker").
COUPON: Rate to be determined by Banker based on comparable quality
securities.
ISSUE PRICE: 100% of principal amount.
RANKING: The Notes will rank senior to all existing and future
Indebtedness of Ticketmaster Holdings Group, Ltd.
All other provisions, including mandatory redemption, optional redemption,
change of control, affirmative covenants, negative covenants and events of
default shall be determined by the Banker based on comparable securities.
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COVENANT NOT TO COMPETE
(Stock Subscription Agreement)
THIS COVENANT NOT TO COMPETE (the "Agreement") is made and entered into
this 15th day of December, 1993, by and among TICKETMASTER HOLDINGS GROUP, LTD.,
an Illinois corporation (the "Company"), Paul Allen, an individual ("Buyer") and
HG, Inc., a Delaware corporation ("Shareholder"), with reference to the
following facts:
A. Pursuant to that certain Stock Subscription Agreement dated as of
November 20, 1993, as amended, between the Company and Buyer (the "Subscription
Agreement"), Buyer has agreed to purchase (when added to the shares being
purchased from other stockholders of the Company) 79.9% of the then issued and
outstanding Common Stock of the Company (the "Shares"). Absent this agreement,
Buyer would have been unwilling to purchase the Shares under the Subscription
Agreement. Capitalized terms otherwise not defined herein shall have the
meanings set forth in the Subscription Agreement.
B. For purposes of this Agreement, the "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical,
cinematic, live theatrical, musical or any other events on behalf of various
venues and promoters through distribution channels currently being utilized
by the Company or any of the Ticketmaster Entities (as defined in the
Subscription Agreement).
NOW, THEREFORE, based on the above premises and in consideration of
the purchase by Buyer of the Shares, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. COVENANT NOT TO COMPETE. For a period of three (3) years from and
after the date hereof, Shareholder will not, without the prior written consent
of Buyer and the Company, directly or indirectly engage in or assist any
activity which is the same as, similar to, or competitive with the Ticketmaster
Businesses (other than on behalf of the Company, the Ticketmaster Entities or
Buyer), including, without limitation, whether such engagement or assistance is
as an officer, director, proprietor, employee, partner, investor (other than as
a holder of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative or
other participant, anywhere in the world that the Company or any of the
Ticketmaster Entities has been engaged , including without limitation, the
United States, Canada, Mexico, England, Ireland, Scotland, Europe and Australia.
Nothing herein shall limit Shareholder's ability to own interests in or manage
entities which sell tickets as an incidental part of their primary businesses
(e.g. cable networks, on-line computer services, sports teams,
<PAGE>
arenas, hotels, cruise lines, theatrical and movie productions and the like) and
which do not hold themselves out generally as competitors of the Company and its
subsidiaries.
2. SOLICITATION OF EMPLOYEES. For a period of three (3) years from and
after the date hereof, the Shareholder shall not (i) directly or indirectly
induce or attempt to induce any person then employed (whether part-time or
full-time) by the Company or any Ticketmaster Entity, whether as an officer,
employee, consultant, adviser or independent contractor, to leave the employ of
the Company or to cease providing or otherwise alter the services then provided
to the Company or to another Ticketmaster Entity or (ii) in any other manner
seek to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in connection
with the operation of any business which is the same as or similar to any of the
Ticketmaster Businesses.
3. NON-SOLICITATION OF CUSTOMERS. For a period of three (3) years from
and after the date hereof, Shareholder shall not solicit any customers of the
Company or another Ticketmaster Entity or encourage any such customers to use
the facilities or services of any competitor of the Company or another
Ticketmaster Entity. Customer shall mean any person who engages the Company or
any Ticketmaster Entity to sell, on its behalf as agent, tickets to the public.
4. PROPRIETARY INFORMATION. Shareholder will not at any time (during or
after the periods referred to above) disclose or use, except in the pursuit of
the business of the Company or another Ticketmaster Entity , any proprietary
information of the Company or other Ticketmaster Entity. "Proprietary
information of the Company or other Ticketmaster Entity" means all information
known or intended to be known only to employees of the Company or other
Ticketmaster Entity in a confidential relationship with the Company or other
Ticketmaster Entity, relating to technical matters pertaining to the business of
the Company or other Ticketmaster Entities. Shareholder agrees not to remove
any documents, records or other information from the premises of the Company or
other Ticketmaster Entities containing any such proprietary information, except
in the pursuit of the business of the Company or another Ticketmaster Entity and
acknowledges that such documents, records and other information are the
exclusive property of the Company or other Ticketmaster Entities.
5. EQUITABLE RELIEF. Shareholder acknowledges that the covenants
contained in Sections 1 through 4 hereof are reasonable and necessary to protect
the legitimate interests of Buyer and the Company, that in the absence of such
covenants Buyer would not have entered into the Subscription Agreement, that
any breach or threatened breach of such covenants will result in irreparable
injury to Buyer and the Company and that the remedy at law for such
-2-
<PAGE>
breach or threatened breach would be inadequate. Accordingly, the Shareholder
agrees that each of Buyer and the Company, in addition to any other rights or
remedies which it may have, shall be entitled to seek such equitable and
injunctive relief as may be available from any court of competent jurisdiction
to restrain the Shareholder from any breach or threatened breach of such
covenants.
6. MISCELLANEOUS.
6.1 COMPLETE AGREEMENT; MODIFICATIONS. This Agreement and any
documents referred to herein or executed contemporaneously herewith constitute
the parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
6.2 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies
will not constitute a waiver of the right to pursue other available remedies.
6.3 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service, facsimile, telegram, telecopy or
certified mail (postage prepaid) to such address as may be designated from time
to time by the relevant party, and which will initially be as set forth below.
Any notice sent by certified mail will be deemed to have been given three ( 3)
days after the date on which it is mailed. All other notices will be deemed
given when received. No objection may be made to the manner of delivery of any
notice actually received in writing by an authorized agent of a party. Notices
will be addressed as follows or to such other address as the party to whom the
same is directed will have specified in conformity with the foregoing:
(i) If to the Shareholder:
HG, Inc.
Suite 3800
200 West Madison Street
Chicago, Illinois 60606
Attn: Harold S. Handelsman, Esq.
Fax: (312) 750-8545
-3-
<PAGE>
(ii) If to Buyer:
Paul Allen
1381 S. E. Eastgate Way, Suite 480
Bellevue, Wash. 98005
Fax: (206) 637-1682
(iii) If to the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: General Counsel
6.4 SUCCESSORS AND ASSIGNS. Except as provided herein to the
contrary, this Agreement will be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns. None of the parties
hereto may assign any of their rights or obligations under this Agreement
without the prior written consent of all other parties hereto; provided,
however, that Buyer may assign his rights under this Agreement in connection
with a sale of substantially all of his stock in the Company if such sale
includes the goodwill associated therewith.
6.5 GOVERNING LAW; JURISDICTION. All questions with respect to the
Agreement and the rights and liabilities of the parties will be governed by the
laws of the State of Illinois, regardless of the choice of law provisions of
that State or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard and determined before
an appropriate federal or state court located in Chicago, Illinois. The parties
hereto acknowledge that such court has the jurisdiction to interpret and enforce
the provisions of this Agreement and the parties waive any and all objections
that they may have as to personal jurisdiction or venue in any of the above
courts.
6.6 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time will be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment will be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
6.7 HEADINGS. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
6.8 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect. Further, if the period of time, the extent of the
-4-
<PAGE>
geographic area, or the scope of the prescribed activities covered by this
Agreement should be deemed unenforceable, then this Agreement shall be construed
to cover the maximum period of time, geographic area and scope of prescribed
activities (not to exceed the maximum time, geographic area or scope set forth
herein) as may be valid under applicable law and each of the parties hereto
shall request any court considering the enforceability of this Agreement to
construe and/or reform it so as to render it enforceable to the maximum extent
as provided above.
6.9 REPRESENTATION OF PARTIES. The parties hereto acknowledge that
they are sophisticated and have been represented by lawyers throughout this
transaction.
6.10 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
6.11 ATTORNEYS' FEES. Should any litigation be commenced (including
any proceedings in a bankruptcy court) between the parties hereto or their
representatives concerning any provision of this Agreement or the rights and
duties of any person or entity hereunder, the party or parties prevailing in
such litigation will be entitled to reasonable attorneys' fees and expenses of
counsel and costs incurred by reason of such litigation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
HG INC.
By:
-------------------------------
Title:
TICKETMASTER HOLDINGS GROUP, LTD.
By:
-------------------------------
Title:
------------------------------------
Paul Allen
-5-
<PAGE>
COVENANT NOT TO COMPETE
(Stock Subscription Agreement)
THIS COVENANT NOT TO COMPETE (the "Agreement") is made and entered into
this 15th day of December, 1993, by and among TICKETMASTER HOLDINGS GROUP, LTD.,
an Illinois corporation (the "Company"), Paul Allen, an individual ("Buyer") and
Fredric D. Rosen, a resident of California ("Shareholder"), with reference to
the following facts:
A. Pursuant to that certain Stock Subscription Agreement dated as of
November 20, 1993, as amended, between the Company and Buyer (the "Subscription
Agreement"), Buyer has agreed to purchase (when added to the shares being
purchased from other stockholders of the Company) 79.9% of the then issued and
outstanding Common Stock of the Company (the "Shares"). Absent this agreement,
Buyer would have been unwilling to purchase the Shares under the Subscription
Agreement. Capitalized terms otherwise not defined herein shall have the
meanings set forth in the Subscription Agreement.
B. For purposes of this Agreement, the "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical,
cinematic, live theatrical, musical or any other events on behalf of various
venues and promoters through distribution channels currently being utilized
by the Company or any of the Ticketmaster Entities (as defined in the
Subscription Agreement).
NOW, THEREFORE, based on the above premises and in consideration of
the purchase by Buyer of the Shares, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. COVENANT NOT TO COMPETE. For a period of three (3) years from and
after the date hereof, Shareholder will not, without the prior written consent
of Buyer and the Company, directly or indirectly engage in or assist any
activity which is the same as, similar to, or competitive with the Ticketmaster
Businesses (other than on behalf of the Company, the Ticketmaster Entities or
Buyer), including, without limitation, whether such engagement or assistance is
as an officer, director, proprietor, employee, partner, investor (other than as
a holder of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative or
other participant, anywhere in the world that the Company or any of the
Ticketmaster Entities has been engaged , including without limitation, the
United States, Canada, Mexico, England, Ireland, Scotland, Europe and Australia.
Nothing herein shall limit Shareholder's ability to own interests in or manage
entities which sell tickets as an incidental part of their primary businesses
(e.g. cable networks, on-line computer services, sports teams,
<PAGE>
arenas, hotels, cruise lines, theatrical and movie productions and the like) and
which do not hold themselves out generally as competitors of the Company and its
subsidiaries.
2. SOLICITATION OF EMPLOYEES. For a period of three (3) years from and
after the date hereof, the Shareholder shall not (i) directly or indirectly
induce or attempt to induce any person then employed (whether part-time or
full-time) by the Company or any Ticketmaster Entity, whether as an officer,
employee, consultant, adviser or independent contractor, to leave the employ of
the Company or to cease providing or otherwise alter the services then provided
to the Company or to another Ticketmaster Entity or (ii) in any other manner
seek to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in connection
with the operation of any business which is the same as or similar to any of the
Ticketmaster Businesses.
3. NON-SOLICITATION OF CUSTOMERS. For a period of three (3) years from
and after the date hereof, Shareholder shall not solicit any customers of the
Company or another Ticketmaster Entity or encourage any such customers to use
the facilities or services of any competitor of the Company or another
Ticketmaster Entity. Customer shall mean any person who engages the Company or
any Ticketmaster Entity to sell, on its behalf as agent, tickets to the public.
4. PROPRIETARY INFORMATION. Shareholder will not at any time (during or
after the periods referred to above) disclose or use, except in the pursuit of
the business of the Company or another Ticketmaster Entity , any proprietary
information of the Company or other Ticketmaster Entity. "Proprietary
information of the Company or other Ticketmaster Entity" means all information
known or intended to be known only to employees of the Company or other
Ticketmaster Entity in a confidential relationship with the Company or other
Ticketmaster Entity, relating to technical matters pertaining to the business of
the Company or other Ticketmaster Entities. Shareholder agrees not to remove
any documents, records or other information from the premises of the Company or
other Ticketmaster Entities containing any such proprietary information, except
in the pursuit of the business of the Company or another Ticketmaster Entity and
acknowledges that such documents, records and other information are the
exclusive property of the Company or other Ticketmaster Entities.
5. EQUITABLE RELIEF. Shareholder acknowledges that the covenants
contained in Sections 1 through 4 hereof are reasonable and necessary to protect
the legitimate interests of Buyer and the Company, that in the absence of such
covenants Buyer would not have entered into the Subscription Agreement, that
any breach or threatened breach of such covenants will result in irreparable
injury to Buyer and the Company and that the remedy at law for such
-2-
<PAGE>
breach or threatened breach would be inadequate. Accordingly, the Shareholder
agrees that each of Buyer and the Company, in addition to any other rights or
remedies which it may have, shall be entitled to seek such equitable and
injunctive relief as may be available from any court of competent jurisdiction
to restrain the Shareholder from any breach or threatened breach of such
covenants.
6. MISCELLANEOUS.
6.1 COMPLETE AGREEMENT; MODIFICATIONS. This Agreement and any
documents referred to herein or executed contemporaneously herewith constitute
the parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
6.2 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies
will not constitute a waiver of the right to pursue other available remedies.
6.3 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service, facsimile, telegram, telecopy or
certified mail (postage prepaid) to such address as may be designated from time
to time by the relevant party, and which will initially be as set forth below.
Any notice sent by certified mail will be deemed to have been given three ( 3)
days after the date on which it is mailed. All other notices will be deemed
given when received. No objection may be made to the manner of delivery of any
notice actually received in writing by an authorized agent of a party. Notices
will be addressed as follows or to such other address as the party to whom the
same is directed will have specified in conformity with the foregoing:
(i) If to the Shareholder:
Fredric D. Rosen
3701 Wilshire Blvd.
6th Floor
Los Angeles, California 90010
Fax: (310) 382-1146
-3-
<PAGE>
(ii) If to Buyer:
Paul Allen
1381 S. E. Eastgate Way, Suite 480
Bellevue, Washington 98005
Fax: (206) 637-1682
(iii) If to the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: General Counsel
6.4 SUCCESSORS AND ASSIGNS. Except as provided herein to the
contrary, this Agreement will be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns. None of the parties
hereto may assign any of their rights or obligations under this Agreement
without the prior written consent of all other parties hereto; provided,
however, that Buyer may assign his rights under this Agreement in connection
with a sale of substantially all of his stock in the Company if such sale
includes the goodwill associated therewith.
6.5 GOVERNING LAW; JURISDICTION. All questions with respect to the
Agreement and the rights and liabilities of the parties will be governed by the
laws of the State of Illinois, regardless of the choice of law provisions of
that State or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard and determined before
an appropriate federal or state court located in Chicago, Illinois. The parties
hereto acknowledge that such court has the jurisdiction to interpret and enforce
the provisions of this Agreement and the parties waive any and all objections
that they may have as to personal jurisdiction or venue in any of the above
courts.
6.6 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time will be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment will be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
6.7 HEADINGS. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
6.8 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect. Further, if the period of time, the extent of the
-4-
<PAGE>
geographic area, or the scope of the prescribed activities covered by this
Agreement should be deemed unenforceable, then this Agreement shall be construed
to cover the maximum period of time, geographic area and scope of prescribed
activities (not to exceed the maximum time, geographic area or scope set forth
herein) as may be valid under applicable law and each of the parties hereto
shall request any court considering the enforceability of this Agreement to
construe and/or reform it so as to render it enforceable to the maximum extent
as provided above.
6.9 REPRESENTATION OF PARTIES. The parties hereto acknowledge that
they are sophisticated and have been represented by lawyers throughout this
transaction.
6.10 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
6.11 ATTORNEYS' FEES. Should any litigation be commenced (including
any proceedings in a bankruptcy court) between the parties hereto or their
representatives concerning any provision of this Agreement or the rights and
duties of any person or entity hereunder, the party or parties prevailing in
such litigation will be entitled to reasonable attorneys' fees and expenses of
counsel and costs incurred by reason of such litigation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
------------------------------------
Fredric D. Rosen
TICKETMASTER HOLDINGS GROUP, LTD.
By:
-------------------------------
Title:
------------------------------------
Paul Allen
-5-
<PAGE>
COVENANT NOT TO COMPETE
(Stock Subscription Agreement)
THIS COVENANT NOT TO COMPETE (the "Agreement") is made and entered into
this 15th day of December, 1993, by and among TICKETMASTER HOLDINGS GROUP, LTD.,
an Illinois corporation (the "Company"), Paul Allen, an individual ("Buyer") and
Robert A. Leonard, a resident of California ("Shareholder"), with reference to
the following facts:
A. Pursuant to that certain Stock Subscription Agreement dated as of
November 20, 1993, as amended, between the Company and Buyer (the "Subscription
Agreement"), Buyer has agreed to purchase (when added to the shares being
purchased from other stockholders of the Company) 79.9% of the then issued and
outstanding Common Stock of the Company (the "Shares"). Absent this agreement,
Buyer would have been unwilling to purchase the Shares under the Subscription
Agreement. Capitalized terms otherwise not defined herein shall have the
meanings set forth in the Subscription Agreement.
B. For purposes of this Agreement, the "Ticketmaster Businesses" shall
mean the computerized sale of tickets for sporting, theatrical, cinematic, live
theatrical, musical or any other events on behalf of various venues and
promoters through distribution channels currently being utilized by the Company
or any of the Ticketmaster Entities (as defined in the Subscription Agreement).
NOW, THEREFORE, based on the above premises and in consideration of
the purchase by Buyer of the Shares, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. COVENANT NOT TO COMPETE. For a period of three (3) years from and
after the date hereof, Shareholder will not, without the prior written consent
of Buyer and the Company, directly or indirectly engage in or assist any
activity which is the same as, similar to, or competitive with the Ticketmaster
Businesses (other than on behalf of the Company, the Ticketmaster Entities or
Buyer), including, without limitation, whether such engagement or assistance is
as an officer, director, proprietor, employee, partner, investor (other than as
a holder of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative or
other participant, anywhere in the world that the Company or any of the
Ticketmaster Entities has been engaged , including without limitation, the
United States, Canada, Mexico, England, Ireland, Scotland, Europe and Australia.
Nothing herein shall limit Shareholder's ability to own interests in or manage
entities which sell tickets as an incidental part of their primary businesses
(e.g. cable networks, on-line computer services, sports teams,
<PAGE>
arenas, hotels, cruise lines, theatrical and movie productions and the like) and
which do not hold themselves out generally as competitors of the Company and its
subsidiaries.
2. SOLICITATION OF EMPLOYEES. For a period of three (3) years from and
after the date hereof, the Shareholder shall not (i) directly or indirectly
induce or attempt to induce any person then employed (whether part-time or
full-time) by the Company or any Ticketmaster Entity, whether as an officer,
employee, consultant, adviser or independent contractor, to leave the employ of
the Company or to cease providing or otherwise alter the services then provided
to the Company or to another Ticketmaster Entity or (ii) in any other manner
seek to engage or employ any such person (whether or not for compensation) as an
officer, employee, consultant, adviser or independent contractor in connection
with the operation of any business which is the same as or similar to any of the
Ticketmaster Businesses.
3. NON-SOLICITATION OF CUSTOMERS. For a period of three (3) years from
and after the date hereof, Shareholder shall not solicit any customers of the
Company or another Ticketmaster Entity or encourage any such customers to use
the facilities or services of any competitor of the Company or another
Ticketmaster Entity. Customer shall mean any person who engages the Company or
any Ticketmaster Entity to sell, on its behalf as agent, tickets to the public.
4. PROPRIETARY INFORMATION. Shareholder will not at any time (during or
after the periods referred to above) disclose or use, except in the pursuit of
the business of the Company or another Ticketmaster Entity , any proprietary
information of the Company or other Ticketmaster Entity. "Proprietary
information of the Company or other Ticketmaster Entity" means all information
known or intended to be known only to employees of the Company or other
Ticketmaster Entity in a confidential relationship with the Company or other
Ticketmaster Entity, relating to technical matters pertaining to the business of
the Company or other Ticketmaster Entities. Shareholder agrees not to remove
any documents, records or other information from the premises of the Company or
other Ticketmaster Entities containing any such proprietary information, except
in the pursuit of the business of the Company or another Ticketmaster Entity and
acknowledges that such documents, records and other information are the
exclusive property of the Company or other Ticketmaster Entities.
5. EQUITABLE RELIEF. Shareholder acknowledges that the covenants
contained in Sections 1 through 4 hereof are reasonable and necessary to protect
the legitimate interests of Buyer and the Company, that in the absence of such
covenants Buyer would not have entered into the Subscription Agreement, that
any breach or threatened breach of such covenants will result in irreparable
injury to Buyer and the Company and that the remedy at law for such
-2-
<PAGE>
breach or threatened breach would be inadequate. Accordingly, the Shareholder
agrees that each of Buyer and the Company, in addition to any other rights or
remedies which it may have, shall be entitled to seek such equitable and
injunctive relief as may be available from any court of competent jurisdiction
to restrain the Shareholder from any breach or threatened breach of such
covenants.
6. MISCELLANEOUS.
6.1 COMPLETE AGREEMENT; MODIFICATIONS. This Agreement and any
documents referred to herein or executed contemporaneously herewith constitute
the parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
6.2 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies
will not constitute a waiver of the right to pursue other available remedies.
6.3 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service, facsimile, telegram, telecopy or
certified mail (postage prepaid) to such address as may be designated from time
to time by the relevant party, and which will initially be as set forth below.
Any notice sent by certified mail will be deemed to have been given three ( 3)
days after the date on which it is mailed. All other notices will be deemed
given when received. No objection may be made to the manner of delivery of any
notice actually received in writing by an authorized agent of a party. Notices
will be addressed as follows or to such other address as the party to whom the
same is directed will have specified in conformity with the foregoing:
(i) If to the Shareholder:
Robert A. Leonard
3701 Wilshire Blvd.
6th Floor
Los Angeles, California 90010
Fax: (310) 382-1146
-3-
<PAGE>
(ii) If to Buyer:
Paul Allen
1381 S. E. Eastgate Way, Suite 480
Bellevue, Washington 98005
Fax: (206) 637-1682
(iii) If to the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: General Counsel
6.4 SUCCESSORS AND ASSIGNS. Except as provided herein to the
contrary, this Agreement will be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns. None of the parties
hereto may assign any of their rights or obligations under this Agreement
without the prior written consent of all other parties hereto; provided,
however, that Buyer may assign his rights under this Agreement in connection
with a sale of substantially all of his stock in the Company if such sale
includes the goodwill associated therewith.
6.5 GOVERNING LAW; JURISDICTION. All questions with respect to the
Agreement and the rights and liabilities of the parties will be governed by the
laws of the State of Illinois, regardless of the choice of law provisions of
that State or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard and determined before
an appropriate federal or state court located in Chicago, Illinois. The parties
hereto acknowledge that such court has the jurisdiction to interpret and enforce
the provisions of this Agreement and the parties waive any and all objections
that they may have as to personal jurisdiction or venue in any of the above
courts.
6.6 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time will be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment will be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
6.7 HEADINGS. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
6.8 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect. Further, if the period of time, the extent of the
-4-
<PAGE>
geographic area, or the scope of the prescribed activities covered by this
Agreement should be deemed unenforceable, then this Agreement shall be construed
to cover the maximum period of time, geographic area and scope of prescribed
activities (not to exceed the maximum time, geographic area or scope set forth
herein) as may be valid under applicable law and each of the parties hereto
shall request any court considering the enforceability of this Agreement to
construe and/or reform it so as to render it enforceable to the maximum extent
as provided above.
6.9 REPRESENTATION OF PARTIES. The parties hereto acknowledge that
they are sophisticated and have been represented by lawyers throughout this
transaction.
6.10 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
6.11 ATTORNEYS' FEES. Should any litigation be commenced (including
any proceedings in a bankruptcy court) between the parties hereto or their
representatives concerning any provision of this Agreement or the rights and
duties of any person or entity hereunder, the party or parties prevailing in
such litigation will be entitled to reasonable attorneys' fees and expenses of
counsel and costs incurred by reason of such litigation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
----------------------------------------
Robert A. Leonard
TICKETMASTER HOLDINGS GROUP, LTD.
By:
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Title:
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Paul Allen
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COVENANT NOT TO COMPETE
(the Movie Tix Agreement)
THIS COVENANT NOT TO COMPETE (the "Agreement") is made and entered into
this 15th day of December, 1993, by and between TICKETMASTER HOLDINGS GROUP,
LTD., an Illinois corporation (the "Purchaser"), TM MOVIE TIX,INC., a Delaware
corporation (the "Company") and Fredric D. Rosen, an individual ("Rosen"), with
reference to the following facts:
A. Pursuant to that certain Subscription and Stock Sale Agreement
dated as of November 20, 1993 between Purchaser and Rosen (the "Sale
Agreement"), Purchaser has agreed to acquire the Shares (as defined in the Sale
Agreement). Absent this covenant not to compete, Purchaser would have been
unwilling to purchase the Shares under the Sale Agreement. Capitalized terms
otherwise not defined herein shall have the meanings set forth in the Sale
Agreement.
B. For purposes of this Agreement, the "Company Businesses" shall mean
the computerized sale of tickets for theatrical and cinematic or any other
events on behalf of various venues and promoters through distribution channels
currently being utilized by the Company.
NOW, THEREFORE, based on the above premises and in consideration of
the acquisition by Purchaser of the Shares, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. COVENANT NOT TO COMPETE. For a period of three (3) years from and
after the date hereof, Rosen will not, without the prior written consent of
Purchaser, directly or indirectly engage in or assist any activity which is the
same as, similar to, or competitive with the Company Businesses (other than on
behalf of Purchaser or its subsidiaries, affiliates (as defined in Rule 405 of
the Regulations promulgated under the Securities Act of 1933, as amended),
including, without limitation, whether such engagement or assistance is as an
officer, director, proprietor, employee, partner, investor (other than as a
holder of less than 5% of the outstanding capital stock of a publicly traded
corporation), guarantor, consultant, advisor, agent, sales representative or
other participant, anywhere in the world the Company has been engaged, including
without limitation, the United States and England. Nothing herein shall limit
Rosen's ability to own interests in or manage entities which sell tickets as an
incidental part of their primary businesses (e.g. cable networks, on-line
computer services, sports teams, arenas, hotels, cruise lines, theatrical and
movie productions and the like) and which do not hold themselves out generally
as competitors of the Company, or its subsidiaries and affiliates.
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2. SOLICITATION OF EMPLOYEES. For a period of three (3) years from and
after the date hereof, the Rosen shall not (i) directly or indirectly induce or
attempt to induce any person then employed (whether part-time or full-time) by
the Company whether as an officer, employee, consultant, adviser or independent
contractor, to leave the employ of the Company or to cease providing or
otherwise alter the services then provided to the Company or (ii) in any other
manner seek to engage or employ any such person (whether or not for
compensation) as an officer, employee, consultant, adviser or independent
contractor in connection with the operation of any business which is the same as
or similar to the Company.
3. NON-SOLICITATION OF CUSTOMERS. For a period of three (3) years from
and after the date hereof, Rosen shall not solicit any customers of the Company
or encourage any such customers to use the facilities or services of any
competitor of the Company. Customer shall mean any person who engages the
Company to sell, on its behalf as agent, tickets to the public.
4. PROPRIETARY INFORMATION. Rosen will not at any time (during or after
the periods referred to above) disclose or use, except in the pursuit of the
business of the Company or any of its subsidiaries or affiliates any proprietary
information of the Company. "Proprietary information of the Company means all
information known or intended to be known only to employees of the Company in a
confidential relationship with the Company, relating to technical matters
pertaining to the business of the Company. Rosen agrees not to remove any
documents, records or other information from the premises of the Company
containing any such proprietary information, except in the pursuit of the
business of the Company or any of its subsidiaries or affiliates and
acknowledges that such documents, records and other information are the
exclusive property of the Company.
5. EQUITABLE RELIEF. Rosen acknowledges that the covenants contained in
Sections 1 through 4 hereof are reasonable and necessary to protect the
legitimate interests of Purchaser and the Company, that in the absence of such
covenants Purchaser would not have entered into the Sale Agreement, that any
breach or threatened breach of such covenants will result in irreparable injury
to Purchaser and the Company and that the remedy at law for such breach or
threatened breach would be inadequate. Accordingly, the Rosen agrees that each
of Purchaser and the Company, in addition to any other rights or remedies which
either of them may have, shall be entitled to seek such equitable and injunctive
relief as may be available from any court of competent jurisdiction to restrain
the Rosen from any breach or threatened breach of such covenants.
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6. MISCELLANEOUS.
6.1 COMPLETE AGREEMENT; MODIFICATIONS. This Agreement and any
documents referred to herein or executed contemporaneously herewith constitute
the parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
6.2 REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies
will not constitute a waiver of the right to pursue other available remedies.
6.3 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service, facsimile, telegram, telecopy or
certified mail (postage prepaid) to such address as may be designated from time
to time by the relevant party, and which will initially be as set forth below.
Any notice sent by certified mail will be deemed to have been given three ( 3)
days after the date on which it is mailed. All other notices will be deemed
given when received. No objection may be made to the manner of delivery of any
notice actually received in writing by an authorized agent of a party. Notices
will be addressed as follows or to such other address as the party to whom the
same is directed will have specified in conformity with the foregoing:
(i) If to Rosen:
c/o Ticketmaster Corporation
3701 Wilshire Boulevard
7th Floor
Los Angeles, California 90010
Telecopy No.: (213) 382-1146
With a copy to:
Stephen J. Saft
Kleban & Samor, P.C.
2425 Post Road
Southport, Connecticut 06490
Telecopy No.: (203) 259-9617
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<PAGE>
(ii) If to Purchaser or the Company:
Ticketmaster Holdings Group, Ltd.
3701 Wilshire Boulevard
Los Angeles, California 90010
Attention: General Counsel
Telecopy No.: (213) 382-1146
With a copy to:
Neal Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-1747
6.4 SUCCESSORS AND ASSIGNS. Except as provided herein to the
contrary, this Agreement will be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns. None of the parties
hereto may assign any of their rights or obligations under this Agreement
without the prior written consent of all other parties hereto; provided,
however, that Purchaser may assign its rights under this Agreement in connection
with a sale of substantially all of its stock in the Company if such sale
includes the goodwill associated therewith.
6.5 GOVERNING LAW; JURISDICTION. All questions with respect to the
Agreement and the rights and liabilities of the parties will be governed by the
laws of the State of Illinois, regardless of the choice of law provisions of
that State or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard and determined before
an appropriate federal or state court located in Chicago, Illinois. The parties
hereto acknowledge that such court has the jurisdiction to interpret and enforce
the provisions of this Agreement and the parties waive any and all objections
that they may have as to personal jurisdiction or venue in any of the above
courts.
6.6 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time will be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment will be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
6.7 HEADINGS. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
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<PAGE>
6.8 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect. Further, if the period of time, the extent of the
geographic area, or the scope of the prescribed activities covered by this
Agreement should be deemed unenforceable, then this Agreement shall be construed
to cover the maximum period of time, geographic area and scope of prescribed
activities (not to exceed the maximum time, geographic area or scope set forth
herein) as may be valid under applicable law and each of the parties hereto
shall request any court considering the enforceability of this Agreement to
construe and/or reform it so as to render it enforceable to the maximum extent
as provided above.
6.9 REPRESENTATION OF PARTIES. The parties hereto acknowledge that
they are sophisticated and have been represented by lawyers throughout this
transaction.
6.10 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
6.11 TERMINATION. Should Purchaser elect to terminate the Rosen's
employment for any reason other than cause as defined in the Employment
Agreement between Purchaser and Rosen, or should Rosen elect to terminate his
employment with Purchaser for "Good Reason" as defined in such Employment
Agreement, paragraphs 1, 2 and 3 to this Covenant Not To Compete shall likewise
terminate and be of no further force and effect whatsoever except Rosen shall
not interfere with respect to existing contracts with customers or employees.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
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Fredric D. Rosen
TICKETMASTER HOLDINGS GROUP, LTD., an Illinois
corporation
By:
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Title:
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TM MOVIE TIX, INC., an Illinois
corporation
By:
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Title:
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SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "Agreement") is entered into as of
December 15, 1993 by and among Paul Allen, an individual ("Allen") on the one
hand, and HG, Inc., a Delaware corporation ("HG"), and the other signatories to
this Agreement (collectively with HG, referred to herein as the "Existing
Shareholders") on the other hand. The Existing Shareholders and Allen are
sometimes herein collectively referred to as the "Shareholders", and
individually as a "Shareholder".
A. Concurrently with the execution of this Agreement, Allen is
acquiring, pursuant to a Stock Subscription Agreement dated as of November 20,
1993, as amended (the "Subscription Agreement"), shares of Common Stock of
Ticketmaster Holdings Group, Ltd., an Illinois corporation (the "Company"),
representing (when added to the shares being issued concurrently to Fredric D.
Rosen pursuant to the terms of the Movie Tix Agreement attached to the
Subscription Agreement as Exhibit G) 79.9% of the outstanding shares or Common
Stock of the Company (the "Allen Shares") after giving effect to such
acquisition. The shares of the Company's common stock not held by Allen (the
"Existing Shares") are held by the Existing Shareholders. The Allen Shares and
the Existing Shares, and all equity securities issued in exchange therefor or by
virtue thereof, whether by stock dividend, stock split, combination of shares or
otherwise, are referred to herein as the "Shares".
B. The parties hereto desire to enter into this Agreement in order to set
forth their respective rights and obligations with respect to the Shares.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. BOARD REPRESENTATION. During the term of this Agreement, the Existing
Shareholders shall be entitled, acting through their Representative (as defined
in Section 8) to designate one member for election to the Company's Board of
Directors, subject to approval of Allen, which approval shall not be
unreasonably withheld or delayed. Allen agrees to vote his Shares in favor of
such nominee.
2. RESTRICTIONS ON TRANSFER.
A. BY ALLEN
(a) Allen agrees that Allen will not, directly or indirectly, sell,
pledge, give, bequeath, transfer, assign or in any other way whatsoever encumber
or dispose of (a "Transfer") any Shares (or any interest therein), owned by
Allen, except for a
<PAGE>
"Permitted Transfer", any offering of Shares pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or any
public distribution of Shares pursuant to Rule 144 thereunder (collectively, an
"Exempt Transfer") or a Transfer otherwise in compliance with this Agreement.
(b) For purposes of this Agreement, "Permitted Transfer" shall mean
a transfer of Shares by a Shareholder to his or her spouse, lineal descendants
or ancestors (and their spouses) or issue of grandparents, any other
Shareholder, the trustee of a trust for the principal benefit of such persons,
any charitable donation, or any "Affiliate" of such Shareholder (as hereinafter
defined), or any pledge of Shares so long as the Pledgeholder acknowledges that
the provisions of Section 3 of this Agreement shall be applicable to any sale of
the Shares pledged following foreclosure or otherwise. The provisions of
Section 4 shall not apply to a sale by any Pledgeholder. An "Affiliate" of a
Shareholder shall mean any person which controls or is controlled by or under
common control with such Shareholder or who would otherwise be deemed to be an
Affiliate for purposes of the Securities Exchange Act of 1934, as amended.
B. BY EXISTING SHAREHOLDERS
(a) No Existing Shareholder shall Transfer any Shares in connection
with any Exempt Transfer (other than a Rule 144 sale or a Permitted Transfer)
unless he shall have first given written notice to Allen of his intent to do so
and such transfer is thereafter completed in accordance with clause (b) below.
Said notice (the "Notice") shall specify the number of Shares to be sold
pursuant to an effective registration statement.
(b) (i) Within five (5) business days following his receipt of the
Notice, Allen shall notify the Shareholder desiring to Transfer Shares whether
he wishes to purchase all but not less than all of the Shares specified in the
Notice and shall thereupon be legally obligated to purchase the Shares specified
(and the Existing Shareholder shall be obligated to sell such Shares) at the
price provided in clause (ii) below.
(ii) If Allen elects to purchase such Shares, he shall be
obligated to purchase, and such Shareholder shall be obligated to sell all of
such Shares at a price determined as follows: (1) if the Company's Common Stock
is then publicly traded, then at a price equal to the average of the closing
prices for such stock on the ten business days preceding such Notice on the
principal exchange on which the stock is traded (or if traded in the over the
counter market at the mean between the bid and ask prices on such days); or
(2) in the case of an initial public offering (a) at a price determined by the
proposed managing underwriter for the offering as the midpoint between the
estimated high and low range of prices or, if such price is unacceptable to
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such Shareholder, (b) at the actual price at which such Managing Underwriter
shall be prepared to buy the shares (which may be higher or lower than the
midpoint of the estimated price range).
(iii) If Allen elects to purchase such Shares, such purchase shall
be completed within five business days after his responsive notice or, if the
Shareholder elects to follow the procedure specified in clause (ii)(2)(b) above,
immediately after pricing, but concurrently with the dissemination of definitive
prospectuses included as part of the registration statement under clause (2)(b)
above and payment shall be made by immediately available funds.
(iv) If Allen does not elect to purchase the Shares as specified
in the Notice, such Shareholder may, at any time transfer the Shares referred
to in the Notice.
3. TAG-ALONG RIGHTS.
(a) RIGHT TO PARTICIPATE IN SALE. If at any time during the term of
this Agreement, Allen enters into an agreement to Transfer (other than a
Permitted Transfer or Exempt Transfer) any of his Shares (such Transfer being
referred to as a "Tag-Along Sale"), then each of the Existing Shareholders shall
have the right, but not the obligation (except as provided in Section 4), to
participate in such Tag-Along Sale. The number of Shares that each of the
Existing Shareholders will be entitled to include in such Tag-Along Sale (such
Shareholder's "Allotment") shall be determined by multiplying (i) the number of
Shares held by such Shareholder by (ii) a fraction, the numerator of which shall
equal the number of Shares proposed by Allen to be sold or otherwise disposed of
pursuant to the Tag-Along Sale and the denominator of which shall equal the
total number of Shares held by Allen.
(b) SALE NOTICE. Allen shall provide the Representative with written
notice (the "Tag-Along Sale Notice") not less than 30 days prior to the proposed
date of the Tag-Along Sale (the "Tag-Along Sale Date"). Each Tag-Along Sale
Notice shall set forth: (i) the name of each proposed purchaser of Shares in
the Tag-Along Sale; (ii) the number of Shares proposed to be Transferred by
Allen; (iii) the proposed amount and form of consideration to be paid for Shares
and the terms and conditions of payment offered by each proposed purchaser to
Allen and to Existing Shareholders which shall be identical; (iv) the
Shareholders' respective Allotments; (v) confirmation that the proposed
purchaser has been informed of the "Tag-Along Rights" provided for herein and
has agreed to purchase Shares from the Existing Shareholders in accordance with
the terms hereof; and (vi) the Tag-Along Sale Date.
(c) TAG-ALONG NOTICE. No less than ten (10) business days prior to
the Tag-Along Sale Date, the Representative shall provide written notice (the
"Tag Along Notice") to Allen of each
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Existing Shareholder who desires to participate in the Tag-Along Sale. The
Tag-Along Notice shall set forth the names of the Existing Shareholders desiring
to participate and the number of Shares that each such Shareholder elects to
include in the Tag-Along Sale, which shall not exceed such Shareholder's
Allotment. The Tag-Along Notice given by the Representative on behalf of any
Existing Shareholder shall constitute such Shareholder's binding agreement to
sell the Shares specified in the Tag-Along Notice on the terms and conditions
applicable to the Tag-Along Sale and to have the Representative execute and
deliver such instruments as may be required by the purchaser in connection with
such sale (including any required representations and indemnities so long as
they are on a several, rather than a joint and several, basis).
(d) CONSUMMATION OF SALE. If no Tag-Along Notice is received prior
to the ten (10) business day period specified above, Allen shall have the right
to consummate the Tag-Along Sale without the participation of the Existing
Shareholders, but only on terms and conditions which are no more favorable in
any material respect to Allen than as stated in the Tag-Along Sale Notice and
only if such Tag-Along Sale occurs on a date within 60 days after the Tag-Along
Sale Date.
(e) EXCEPTIONS TO TAG-ALONG OBLIGATIONS. The provisions of this
Section 3 shall not apply to (i) Exempt Transfers; and (ii) any Permitted
Transfer.
4. DRAG-ALONG SALES.
(a) RIGHT TO REQUIRE SALE. Notwithstanding any other provision
hereof, if Allen agrees to sell any of the outstanding Shares of the Company
(other than through a Permitted Transfer or an Exempt Transfer) to a bona-fide
unaffiliated third person or group of such persons who would be required to
jointly file a Schedule 13D if the Shares of the Company were subject to the
Securities Exchange Act of 1934, as amended (a "Third Party")which sale results
in Allen owning less than 50% of the Shares of the Company (any such
transaction, a "Drag-Along Sale"), then each Existing Shareholder hereby agrees
to sell to such Third Party, upon the demand of Allen, the same percentage of
the total number of Shares held by such Shareholder on the date of the
Drag-Along Notice (as defined below) as the Shares Allen is proposing to sell in
the Drag-Along Sale represent out of the total Shares held by Allen, at the same
price and on the same terms and conditions as Allen has agreed with such Third
Party; provided however, that each Existing Shareholder shall not be required to
make any representation or warranty in connection with the Drag-Along Sale,
other than as to his ownership and authority to sell, free of liens, claims and
encumbrances, the Shares to be sold by him; and further provided, that neither
the Drag-Along Sale nor each Existing Shareholder's participation therein will
eliminate,
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terminate, limit or restrict any registration or other rights that such Existing
Shareholder may have pursuant to any other agreement, instrument or document to
which it is a party or otherwise. If the Drag-Along Sale is in the form of a
merger transaction, each Existing Shareholder agrees to vote his Shares in favor
of such merger and not to exercise any rights of appraisal or dissent afforded
under applicable law.
(b) DRAG-ALONG NOTICE. Prior to making any Drag-Along Sale, Allen
shall provide the Existing Shareholders with written notice (the "Drag-Along
Notice") not more than 30 nor less than 10 days prior to the proposed date of
the Drag-Along Sale (the "Drag-Along Sale Date"). The Drag-Along Notice shall
set forth: (i) the name and address of the Third Party; (ii) the proposed
amount and form of consideration to be paid per Share and the terms and
conditions of payment offered by the Third Party; (iii) the aggregate number of
Shares to be sold in the Drag-Along Sale; (iv) the number of Shares to be sold
by Allen; (v) the number of Shares of each existing Shareholder to be included
in the Drag-Along Sale; and (vi) the Drag-Along Sale Date.
(c) DELIVERY OF CERTIFICATES. On the Drag-Along Sale Date, each
Existing Shareholder shall deliver a certificate or certificates for the number
of Shares subject to the Drag-Along Sale, duly endorsed for transfer with
signatures guaranteed, to such Third Party in the manner and at the address
indicated in the Drag-Along Notice against delivery of the purchase price for
such Shares together with an executed certificate of representation and warranty
as to the matters to which such Existing Shareholder is required to represent
and warrant pursuant to Section 4(a) hereof.
5. CORPORATE OPPORTUNITY.
(a) If at any time during the term of this Agreement, Allen engages
in any business that would otherwise be competitive with the Ticketmaster
Businesses (as hereinafter defined), such business will be conducted through the
Company, another Ticketmaster Entity (as defined in the Subscription Agreement)
or a subsidiary thereof, except (i) investments in businesses which at the time
of Allen's investment were not competitors of the Ticketmaster Businesses
(except where incidental to their primary businesses) so long as Allen does not
directly or indirectly control such business (whether by stock ownership, board
control or otherwise); (ii) in the case of a publicly traded corporation in
which Allen is the holder of less than 5% of the outstanding capital stock;
(iii) in the case of Microsoft Corporation or its affiliates; (iv) where the
sale of tickets is incidental to the primary business of such business (e.g.,
ownership of cable networks, "on-line" computer services, ownership or
management of sports teams, stadiums, arenas, hotels, cruise lines, theatrical
and movie productions and the like) and which do not at the time of the relevant
transaction hold themselves out generally as
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competitors of the Company and its subsidiaries, or (v) as provided in clause
(c) below.
(b) For purposes of this Agreement, the "Ticketmaster Businesses"
shall mean the computerized sale of tickets for sporting, theatrical, cinematic,
live theater, musical or any other events on behalf of various venues and
promoters through distribution channels then utilized by the Company or any of
its subsidiaries.
(c) The Existing Shareholders acknowledge that, notwithstanding the
foregoing, Allen may invest in businesses that would otherwise be subject to the
provisions of clause (a) above for his own account and not through a
Ticketmaster Entity so long as the Company declines the investment opportunity
and the Existing Shareholders are given an opportunity (except with respect to
purchases of securities effected on an exchange or in the over-the-counter,
other than where Allen acquires control of such business) to co-invest with
Allen on a proportional basis on the same terms and conditions as Allen. The
procedure for effectuating the foregoing co-investment provision shall be as set
forth in Section 3 hereof to the extent applicable. Without the consent of a
majority of the Existing Shareholders, however, the following activities will be
conducted through a Ticketmaster Entity:
(i) Acquisition of selected assets, subject to certain
liabilities, of Wembley, Inc., Pacer CATS Corporation, C.A.T.S.
(Computerized Automatic Ticket Sales) Systems Limited and CCS Cinema
Computer Systems GmbH by a newly organized joint venture, in which the
Company or one of its affiliates will be a direct or indirect investor;
(ii) The operation of the Ticketmaster Businesses in Australia,
primarily by acquiring existing business by or through the formation of a
joint venture in which the Company or one of its affiliates will be a
direct or indirect investor;
(iii) An investment in Video Jukebox Network, Inc., or its
affiliates ("VJN") or acquisition of certain assets of VJN, by a joint
venture in which the Company or one of its affiliates will be a direct or
indirect investor;
(iv) The operation of a cable ticket and shopping channel by a
joint venture, the principal investors in which will be the Company or one
of its affiliates and a Time Warner affiliate;
(v) The operation of the Ticketmaster Music Channel by a joint
venture among several major companies (including Time Warner and Sony) with
up to a 20% investment by the Company; and
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(vi) The operation of a video text channel by a joint venture,
the principal investors in which will be the Company or one of its
affiliates and a Time Warner affiliate.
(d) This agreement is for the benefit of the Company and the Existing
Shareholders and no other person shall have any rights to enforce this
provision.
6. SPECIFIC PERFORMANCE. Due to the fact the securities of the Company
cannot now be readily purchased or sold in the open market, and for other
reasons, the parties will be irreparably damaged in the event that this
Agreement is not specifically enforced. In the event of a breach or threatened
breach of the terms, covenants and/or conditions of this Agreement by any of the
parties hereto, the other parties shall, in addition to all other remedies, be
entitled (without any bond or other security being required) to a temporary
and/or permanent injunction, without showing any actual damage or that monetary
damages would not provide an adequate remedy, and/or a decree for specific
performance, in accordance with the provisions hereof.
7. TERMINATION. This Agreement shall terminate upon either (a) at such
time as the Existing Shareholders collectively own Shares of an amount less than
10% of the Common Stock of the Company outstanding on the date hereof and as to
any Existing Shareholder when such Shareholder owns less than 1% of the Common
Stock of the Company outstanding on the date hereof or (b) the voluntary
agreement, in writing, of all of the parties hereto.
8. REPRESENTATIVE. Each of the Existing Shareholders, by execution of
this Agreement, hereby appoints HG as its representative(the "Representative")
to make and receive all notices, requests, demands and communications to or from
Allen with respect to all matters relating hereto, with the same force and
effect as if given or received personally by or to each Existing Shareholder.
If at any time HG resigns or otherwise is unavailable to act as the
Representative, a successor Representative may be appointed by the written
consent of those Existing Shareholders holding a majority of the Shares then
owned by the Existing Shareholders. Except as provided herein, no other
Existing Shareholder may act with respect to this Agreement other than through
the Representative. The Representative hereby agrees to use its reasonable best
efforts to distribute or convey, as the case may be, promptly to each of the
Existing Shareholders all notices, requests, demands and communications to or
from Allen made or received by the Representative hereunder.
9. MISCELLANEOUS.
9.1 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by
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hand-delivery, registered first-class mail, air courier guaranteeing overnight
delivery, telex or telecopier:
(a) if to an Existing Shareholder, to the Representative at the most
current address given by it to Allen in accordance with the provisions of this
Section 9.1, which address initially is the address set forth beneath HG's name
on the signature page of this Agreement; and
(b) if to Allen, initially at the address set forth on the signature
page of this Agreement as the address of
Allen and thereafter at such other address, notice of which is given to the
Representative in accordance with the provisions of this Section 9.1.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; and when receipt acknowledged, if telecopied; and on the next
business day if timely delivered to an air courier guaranteeing overnight
delivery.
9.2 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns, heirs, beneficiaries and
personal representatives of each of the parties, other than the purchasers of
shares pursuant to an Exempt Transfer.
9.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.4 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Illinois regardless of the
choice of law provisions of Illinois or any other jurisdiction.
9.6 SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
-8-
<PAGE>
9.7 ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
9.8 ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof or thereof is
validly asserted as a defense, the successful party shall be entitled to
recover, and the court shall award, reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
9.9 PRONOUNS AND HEADINGS. As used herein, all pronouns shall
include the masculine, feminine, neuter, singular and plural wherever the
context and facts require such construction. The descriptive headings in the
sections of this Agreement are inserted for convenience of reference only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
9.10 MODIFICATION; AMENDMENT. No modification or amendment of this
Agreement shall be valid unless the same shall be in writing executed by all the
parties hereto.
9.11 CONSENT OF SPOUSE; INSERTION IN WILL. Each married Shareholder,
or if currently unmarried each Shareholder upon marriage, agrees to obtain the
consent and approval of his spouse, by the execution hereof by such spouse, to
all of the terms and provisions of this Agreement. Each Shareholder agrees to
insert in his last will and testament, or other similar instrument, or execute a
codicil thereto, directing and authorizing his personal representatives to
fulfill and comply with the provisions hereof and to sell and transfer his
shares in accordance with the terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ALLEN:
----------------------------------
Paul Allen
13180 S.E. Eastgate Way
Suite 480
Bellevue, Washington 98005
-9-
<PAGE>
EXISTING SHAREHOLDERS:
HG, INC.
200 West Madison, 38th Floor
Chicago, Illinois 60606
By:
------------------------------------
Name:
Its:
WELLS FARGO & COMPANY, INC.
444 Market Street
17th Floor
San Francisco, CA 94164
By:
------------------------------------
Name:
Its:
---------------------------------------
RICHARD L. SCHULZE
200 West Madison, 38th Floor
Chicago, Illinois 60606
---------------------------------------
HAROLD S. HANDELSMAN
200 West Madison, 38th Floor
Chicago, Illinois 60606
ROCKWOOD & CO.
200 West Madison, 38th Floor
Chicago, Illinois 60606
By:
------------------------------------
Name:
Its:
---------------------------------------
FREDRIC ROSEN
3701 Wilshire Boulevard
6th Floor
Los Angeles, California 90010
<PAGE>
SPOUSAL CONSENT
The undersigned, a spouse of one of the parties to the foregoing
Shareholders' Agreement, hereby consents to the execution of the Shareholders'
Agreement and the consummation of the transactions contemplated thereby by her
spouse and to the extent the undersigned has or hereafter acquires an interest
in and to the property and subject matter of this Shareholders' Agreement hereby
agrees to be bound by the terms of such Shareholders' Agreement.
----------------------------------------
Print Name:
-----------------------------
<PAGE>
Exhibit 23.1
The Board of Directors - Ticketmaster Group, Inc.
The Venturers - Unconsolidated Ticketing Joint Ventures
of Ticketmaster Group, Inc.
The Venturers - Pacer/CATS/CCS -
A Wembley Ticketmaster Joint Venture
The Venturers - Ticketmaster Indiana (A Joint Venture)
We consent to the use of our reports included herein and to the references to
our firm under the headings, "Summary Financial Data," "Selected Financial
Data," and "Experts" in the prospectus.
With respect to Pacer/CATS/CCS - a Wembley Ticketmaster Joint Venture, our
responsibility is to also express an opinion on its financial statement
schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set
forth therein. Also, our report contains an explanatory paragraph that states
that the Joint Venture has suffered recurring losses from operations and has a
net capital deficiency, which raise substantial doubt about its ability to
continue as a going concern. The financial statements and financial statement
schedule do not include any adjustments that might result from the outcome of
that uncertainty.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
September 20, 1996
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 5, 1996, accompanying the financial
statements of Ticketmaster of Delaware Valley, Inc. contained in the
Registration Statement and Prospectus. We consent to the use of the
aforementioned report in the Registration Statement and Prospectus, and to
the use of our name as it appears under the caption "Experts".
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
September 19, 1996
<PAGE>
DEPARTMENT OF JUSTICE
- ------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE AT
WEDNESDAY, JULY 5, 1995 (202) 616-2771
TDD (202) 514-1888
ANTITRUST DIVISION STATEMENT REGARDING TICKETMASTER INQUIRY
The Department of Justice announced today that it has informed
Ticketmaster Holdings Group, Inc., that it is closing its antitrust
investigation into that firm's contracting practices.
The Department will continue to monitor competitive developments in the
ticketing industry.
***
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<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> JAN-31-1996 JAN-31-1997
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0 0
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<INCOME-TAX> (2,250) (129)
<INCOME-CONTINUING> (8,095) (2,418)
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