<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 1999
REGISTRATION NO. 333-84371
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
SFX ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 7922 13-3977880
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
650 MADISON AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10022
(212) 838-3100
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
ROBERT F.X. SILLERMAN, EXECUTIVE CHAIRMAN
SFX ENTERTAINMENT, INC.
650 MADISON AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10022
(212) 838-3100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
----------------
Copies to:
DANIEL A. NINIVAGGI WILLIAM F. SCHWITTER
WINSTON & STRAWN PAUL, HASTINGS,
200 PARK AVENUE JANOFSKY & WALKER LLP
NEW YORK, NEW YORK 10166 399 PARK AVENUE
(212) 294-6700 NEW YORK, NEW YORK 10022
(212) 318-6000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with dividend or
interest reinvestment plans, 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. [ ]
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
EXPLANATORY NOTE
This Amendment No. 2 to the Registration Statement is being filed solely
to file the exhibits attached hereto with the Securities and Exchange
Commission. The Registrant is not updating or modifying any other information
in the Registration Statement at this time.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --- ----------------------
<S> <C>
*1.1 Form of U.S. Underwriting Agreement
*1.2 Form of International Underwriting Agreement
2.1 Distribution Agreement between SFX Entertainment, SFX Broadcasting and SFX Buyer
(incorporated by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with
the SEC on May 5, 1998)
2.2 Amended and Restated Tax Sharing Agreement between SFX Entertainment, SFX
Broadcasting and SBI Holding Corporation (incorporated by reference to Amendment No. 1
to Exhibit 1.1 to Current Report on Form 8-K (File No. 000-24017) filed with the SEC on
June 3, 1998)
2.3 Employee Benefits Agreement between SFX Entertainment and SFX Broadcasting
(incorporated by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with
the SEC on May 5, 1998)
2.4 Amendment No. 1 to Distribution Agreement among SFX Entertainment, Inc., SFX
Broadcasting, Inc. and SBI Holding Corporation (incorporated by reference to Exhibit 2.1 to
Form 8-K (File No. 000-24017) filed with the SEC on June 3, 1998)
3.1 Amended and Restated Certificate of Incorporation of SFX Entertainment (incorporated by
reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the SEC on
May 5, 1998)
3.2 Bylaws of the SFX Entertainment (incorporated by reference to Amendment No. 2 to Form
S-1 (File No. 333-43287) filed with the SEC on February 2, 1998)
4.1 Indenture, dated February 11, 1998, by and among SFX Entertainment, certain of its
subsidiaries and The Chase Manhattan Bank (incorporated by reference to Exhibit 4.1 to
Current Report on Form 8-K of SFX Broadcasting (File No. 000-22486) filed with the SEC on
February 18, 1998)
4.2 Indenture, dated November 25, 1998, by and among SFX Entertainment, certain of its
subsidiaries and The Chase Manhattan Bank (incorporated by reference to Exhibit 4.2 to
Registration Statement on Form S-4 (File No. 333-71195) filed with the SEC on January 26,
1999)
4.3 Supplemental Indenture No. 14 dated July 20, 1999, by and among SFX Entertainment,
certain of its subsidiaries and The Chase Manhattan Bank (incorporated by reference to SFX's
Form 10-Q for the quarter ended June 30, 1999).
4.4 Supplemental Indenture No. 3 dated July 20, 1999, by and among SFX Entertainment, certain
of its subsidiaries and The Chase Manhattan Bank (incorporated by reference to SFX's Form
10-Q for the quarter ended June 30, 1999).
*5.1 Opinion of Winston & Strawn
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --- ----------------------
<S> <C>
*10.1 Asset Purchase Agreement, dated May 28, 1999, among SFX Entertainment, Inc., Livent Inc.,
Livent (U.S.) Inc., Livent Realty (New York) Inc., Livent Realty (Chicago) Inc. and Livent
International Inc. and Amendments No. 1 and No. 2 thereto, dated June 14, 1999 and
August 9, 1999, respectively.
*10.2 Share Purchase Agreement, dated August 2, 1999, among SFX Entertainment, Inc., Anita
Gregg, Paul Gregg and certain other individuals set forth therein.
*23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
**23.2 Consent of Ernst & Young LLP
**23.3 Consent of Arthur Andersen LLP
**23.4 Consent of PricewaterhouseCoopers LLP
**23.5 Consent of Deloitte & Touche
**23.6 Consent of Smith Partnership
**24.1 Power of Attorney
</TABLE>
- ----------
* Filed herewith.
** Previously filed.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on August 16, 1999.
SFX ENTERTAINMENT, INC.
By: /s/ Howard J. Tytel
------------------------------------
Howard J. Tytel
Executive Vice President, General Counsel,
Secretary and Member of the Office of the
Chairman
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- -------------------------- ----------------
<S> <C> <C>
* Executive Chairman, August 16, 1999
- ----------------------------- Member of the Office of
Robert F.X. Sillerman the Chairman and
Director (principal
executive officer)
* Director August 16, 1999
- -----------------------------
Michael G. Ferrel
* Director August 16, 1999
- -----------------------------
Brian Becker
Director
- -----------------------------
David Falk
/s/ Howard J. Tytel Director August 16, 1999
- -----------------------------
Howard J. Tytel
* Chief Financial Officer, August 16, 1999
- ----------------------------- Senior Vice President and
Thomas P. Benson Director (principal
financial and accounting
officer)
* Director August 16, 1999
- -----------------------------
Richard A. Liese
* Director August 16, 1999
- -----------------------------
D. Geoffrey Armstrong
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director August 16, 1999
- -----------------------------
James F. O'Grady, Jr.
* Director August 16, 1999
- -----------------------------
Paul Kramer
* Director August 16, 1999
- -----------------------------
Edward F. Dugan
* Director August 16, 1999
- -----------------------------
John D. Miller
*By: /s/ Howard J. Tytel
------------------------
Howard J. Tytel
Attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT PAGE
- --- ---------------------- ----
<S> <C> <C>
*1.1 Form of U.S. Underwriting Agreement
*1.2 Form of International Underwriting Agreement
2.1 Distribution Agreement between SFX Entertainment, SFX Broadcasting and SFX Buyer
(incorporated by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the
SEC on May 5, 1998)
2.2 Amended and Restated Tax Sharing Agreement between SFX Entertainment, SFX Broadcasting
and SBI Holding Corporation (incorporated by reference to Amendment No. 1 to Exhibit 1.1 to
Current Report on Form 8-K (File No. 000-24017) filed with the SEC on June 3, 1998)
2.3 Employee Benefits Agreement between SFX Entertainment and SFX Broadcasting (incorporated
by reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the SEC on May 5,
1998)
2.4 Amendment No. 1 to Distribution Agreement among SFX Entertainment, Inc., SFX Broadcasting,
Inc. and SBI Holding Corporation (incorporated by reference to Exhibit 2.1 to Form 8-K (File No.
000-24017) filed with the SEC on June 3, 1998)
3.1 Amended and Restated Certificate of Incorporation of SFX Entertainment (incorporated by
reference to Amendment No. 1 to Form S-1 (File No. 333-50079) filed with the SEC on May 5,
1998)
3.2 Bylaws of the SFX Entertainment (incorporated by reference to Amendment No. 2 to Form S-1
(File No. 333-43287) filed with the SEC on February 2, 1998)
4.1 Indenture, dated February 11, 1998, by and among SFX Entertainment, certain of its subsidiaries
and The Chase Manhattan Bank (incorporated by reference to Exhibit 4.1 to Current Report on
Form 8-K of SFX Broadcasting (File No. 000-22486) filed with the SEC on February 18, 1998)
4.2 Indenture, dated November 25, 1998, by and among SFX Entertainment, certain of its subsidiaries
and The Chase Manhattan Bank (incorporated by reference to Exhibit 4.2 to Registration
Statement on Form S-4 (File No. 333-71195) filed with the SEC on January 26, 1999)
4.3 Supplemental Indenture No. 14 dated July 20, 1999, by and among SFX Entertainment, certain of
its subsidiaries and The Chase Manhattan Bank (incorporated by reference to SFX's Form 10-Q for
the quarter ended June 30, 1999).
4.4 Supplemental Indenture No. 3 dated July 20, 1999, by and among SFX Entertainment, certain of its
subsidiaries and The Chase Manhattan Bank (incorporated by reference to SFX's Form 10-Q for
the quarter ended June 30, 1999).
*5.1 Opinion of Winston & Strawn
*10.1 Asset Purchase Agreement, dated May 28, 1999, among SFX Entertainment, Inc., Livent Inc.,
Livent (U.S.) Inc., Livent Realty (New York) Inc., Livent Realty (Chicago) Inc. and Livent
International Inc. and Amendments No. 1 and No. 2 thereto, dated June 14, 1999 and August 9,
1999, respectively.
*10.2 Share Purchase Agreement, dated August 2, 1999, among SFX Entertainment, Inc., Anita Gregg,
Paul Gregg and certain other individuals set forth therein.
*23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
**23.2 Consent of Ernst & Young LLP
**23.3 Consent of Arthur Andersen LLP
**23.4 Consent of PricewaterhouseCoopers LLP
**23.5 Consent of Deloitte & Touche
**23.6 Consent of Smith Partnership
**24.1 Power of Attorney
</TABLE>
- ----------
* Filed herewith.
** Previously filed.
<PAGE>
SFX ENTERTAINMENT, INC.
CLASS A COMMON STOCK
(par value $.01 per share)
U.S. UNDERWRITING AGREEMENT
August __, 1999
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
SFX Entertainment, Inc., a Delaware corporation (the "COMPANY"), proposes,
subject to the terms and conditions stated herein, to issue and sell in the
United States and Canada to the U.S. Underwriters named in Schedule I hereto
(the "U.S. UNDERWRITERS") an aggregate of shares (the "U.S. FIRM STOCK")
of its Class A Common Stock, par value $.01 per share (the "COMMON STOCK") and,
at the election of the U.S. Underwriters, up to additional shares (the
"U.S. OPTIONAL STOCK") of Common Stock of the Company (the U.S. Firm Stock and
the U.S. Optional Stock that the U.S. Underwriters elect to purchase pursuant to
Section 2 hereof being collectively called the "U.S. STOCK." Bear, Stearns & Co.
Inc. and Lehman Brothers
1
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 2
Inc. are acting as representatives of the several U.S. Underwriters and in such
capacity are hereinafter referred to as the "U.S. REPRESENTATIVES."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "INTERNATIONAL UNDERWRITING AGREEMENT")
providing for the sale to the several Underwriters named in Schedule II hereto
(the "INTERNATIONAL MANAGERS," or, each, an "INTERNATIONAL MANAGER"), of an
aggregate of [_____] shares of Common Stock of the Company. The aggregate of
[_____] shares so proposed to be sold is hereinafter referred to as the
"INTERNATIONAL FIRM STOCK." The Company also proposes to sell to the
International Managers, upon the terms and conditions set forth in Section 2
thereof, up to an additional [_____] shares of Stock (the "INTERNATIONAL
OPTIONAL STOCK"). The International Firm Stock and the International Optional
Stock are hereinafter collectively referred to as the "INTERNATIONAL STOCK."
Bear Stearns International Limited and Lehman Brothers International (Europe)
are acting as representatives of the several International Managers and in such
capacity are hereinafter referred to as the "INTERNATIONAL REPRESENTATIVE." The
respective closings under this Agreement and the International Underwriting
Agreement are hereby expressly made conditional upon one another.
The International Managers and U.S. Underwriters are hereinafter
collectively referred to as the "UNDERWRITERS." The International Stock and the
U.S. Stock are hereinafter collectively referred to as the "STOCK." The U.S.
Firm Stock and the International Firm Stock are hereinafter collectively
referred to as the "FIRM STOCK." The U.S. Optional Stock and the International
Optional Stock are hereinafter collectively referred to as the "OPTIONAL STOCK."
Two forms of prospectus are to be used in connection with the offering and sale
of shares of Common Stock contemplated by the foregoing, one relating to the
U.S. Stock and the other relating to the International Stock. The latter form of
prospectus will be identical to the former except for certain substitute pages
as included in the registration statement and amendments thereto. Reference
2
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 3
herein to any prospectus, whether in preliminary or final form, and whether as
amended or supplemented, shall include both the U.S. and the international
versions thereof.
The Company understands that the U.S. Underwriters and the International
Managers will concurrently enter into an agreement between the U.S. and
international underwriting syndicates of even date herewith (the "AGREEMENT
BETWEEN U.S. UNDERWRITERS AND INTERNATIONAL MANAGERS") providing for the
coordination of certain transactions among the U.S. Underwriters and
International Managers and that, pursuant thereto and subject to the conditions
set forth therein, the U.S. Underwriters may purchase from the International
Managers a portion of the International Stock or sell to the International
Managers a portion of the U.S. Stock. The Company understands that any such
purchases and sales between the U.S. Underwriters and the International Managers
shall be governed by the Agreement Between U.S. Underwriters and International
Managers and shall not be governed by the terms of this Agreement or the
International Underwriting Agreement.
The Company understands that the U.S. Underwriters propose to make a public
offering of the U.S. Stock as soon as the U.S. Representatives deem advisable
after this Agreement has been executed and delivered.
1. REPRESENTATIVES AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to, and agrees with, each of the U.S. Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-84371), including all
amendments thereto (the "INITIAL REGISTRATION STATEMENT"), in respect of the
Stock, has (i) been filed with the Securities and Exchange Commission (the
"COMMISSION") and (ii) been declared effective by the Commission in such form.
Other than a registration statement, if any, increasing the size of the offering
(a "RULE 462(B) REGISTRATION STATEMENT") filed pursuant to Rule 462(b) under the
Securities Act of
3
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 4
1933, as amended (the "ACT"), which became effective upon filing, no other
document (other than documents specifically incorporated by reference therein),
with respect to the Initial Registration Statement has heretofore been filed
with the Commission. No stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "PRELIMINARY PROSPECTUS"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act
and including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part
of the Initial Registration Statement at the time it was declared effective or
such part of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, each as amended at the time such part of the Initial
Registration Statement became effective, is hereinafter collectively called the
"REGISTRATION STATEMENT"; and such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the "PROSPECTUS");
(b) The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will
conform, in all material respects, to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished
4
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 5
in writing to the Company by an Underwriter through Bear, Stearns & Co. Inc. and
Lehman Brothers Inc. expressly for use therein;
(c) Neither the Company nor any of its subsidiaries has taken, nor will any
of them take, directly or indirectly, any action designed to, or that could
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the U.S. Stock to facilitate the sale and resale of the Stock;
(d) Except as described in the Prospectus, neither the Company nor its
subsidiaries has sustained since the date of the latest audited financial
statements included in the Prospectus any material loss or interference with
their respective businesses, taken as a whole, from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any material change in the capital stock or long-term debt (other than
borrowings in the ordinary course of business) of the Company or any of its
subsidiaries, or any material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Prospectus;
(e) To the Company's knowledge, as of the date hereof, the representations
and warranties in the Apollo Acquisition Agreement when made (or as of any date
deemed made) (the "ACQUISITION AGREEMENT") are true and correct in all material
respects;
(f) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects except
as (i) described in the Prospectus (ii) as permitted under the Senior Credit
Facility or (iii) where the
5
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 6
failure to have such title would not reasonably be expected to have a material
adverse effect on the financial condition or results of operations of the
Company and its direct and indirect subsidiaries, taken as a whole (a "MATERIAL
ADVERSE EFFECT"), and any real property and buildings held under lease by the
Company or its subsidiaries are held by them under valid, subsisting and
enforceable leases, except as would not have a Material Adverse Effect after
giving effect to the Apollo Acquisition ("APOLLO") (the "PENDING ACQUISITION");
(g) The Company is a corporation duty organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus, is duty registered and qualified to
conduct its business and is in good standing, in each jurisdiction or place
where the nature of its business requires such registration or qualification,
except where the failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect;
(h) Each Significant Subsidiary (as defined in Regulation S-X of the
Securities Act) is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus, is duly registered and qualified to conduct its
business and is in good standing, in each jurisdiction or place where the nature
of its business requires such registration or qualification, except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect;
(i) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable,
free of any preemptive or similar rights and conform to the description of the
capital stock contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and
6
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 7
non-assessable and, except as set forth in the Prospectus, free of any
preemptive or similar rights, and, except as set forth in the Prospectus or the
Registration Statement are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims and have been issued in
compliance with all applicable federal and state securities laws;
(j) The unissued shares of Stock to be issued and sold by the Company to the
U.S. Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued, fully paid and non-assessable, free of any preemptive or
similar rights and will conform to the description of the Stock contained in the
Prospectus;
(k) The Company or its subsidiaries, as applicable, have full corporate
power and authority to enter into the Underwriting Agreements and the
Acquisition Agreement and to carry out all the terms and provisions as provided
herein and therein;
(l) The execution and delivery of each of the Underwriting Agreements and
the Acquisition Agreement have been duly authorized by the Company and the
Underwriting Agreements and the Acquisition Agreement are enforceable against
the Company in accordance with their respective terms except to the extent that:
(i) the same may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other laws now or hereafter in effect
relating to creditors' rights generally or by general principles of equity
whether asserted in an action at law or in equity; and (ii) rights to indemnity
and contribution hereunder may be limited by state or federal securities laws or
the public policy underlying such laws;
(m) Except (i) as disclosed in the Prospectus and (ii) as disclosed in the
Acquisition Agreement (including all schedules and attachments), the issue and
sale of the Stock by the Company, the execution, delivery and performance of the
Underwriting Agreements by the Company, and the consummation by the Company and
7
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 8
its subsidiaries of the transactions contemplated hereby and thereby will not
(A) require any consent, approval, authorization or other order (which has not
been obtained) of any court, regulatory body, administrative agency or other
governmental body except such as may be required under the Securities Act,
securities regulatory bodies (including self-regulatory bodies), securities
exchanges or the securities or Blue Sky laws of the various states; (B) conflict
with or constitute a breach of any of the terms or provisions of, or a default
under, the charter or by-laws of the Company or any of its subsidiaries; (C)
require any consent or approval (which has not been obtained) of the parties to,
or conflict with or constitute a breach of any of the terms or provisions of, or
a default under, any agreement or other instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound; (D) violate or conflict with
any laws or administrative regulations, rulings of court, decrees applicable to
the Company, any of its subsidiaries or their respective property; or (E) result
in the creation or imposition of any lien on any asset of the Company or any of
its subsidiaries, except, in the case of (A), (C), (D) or (E) above, such as
would not, either singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect or prevent the Company from performing its obligations
hereunder or under the International Underwriting Agreement;
(n) Neither the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation, By-Laws or similar organizational documents or in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound which would reasonably be
expected to have a Material Adverse Effect or prevent the Company from
performing its obligations hereunder or under the International Agreement;
(o) The statements contained under the caption "Agreements Related To
Pending Acquisitions," insofar as they purport to describe the provisions of the
documents referred to therein, are accurate, complete and fair in all material
respects;
8
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 9
(p) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its subsidiaries is
subject which would individually or in the aggregate reasonably be expected to
have a Material Adverse Effect, and to the best of the Company's knowledge, no
such proceedings have been threatened by governmental authorities or others;
(q) Except as disclosed in the Prospectus, there are no outstanding (A)
securities or obligations of the Company or any of its subsidiaries convertible
into or exchangeable for any capital stock of the Company, (B) warrants, rights
or options to subscribe for or purchase from the Company or any of its
subsidiaries any such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company or any of its
subsidiaries to issue any shares of capital stock of the Company, any
convertible or exchangeable securities or obligations, or any warrants, rights
or options;
(r) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities owned by such person or to
require the Company to include such securities in any registration statement
filed by the Company under the Securities Act;
(s) The Company is not and, after giving effect to the offering and sale of
the Stock, will not be (i) an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the Investment Company Act
of 1940, as amended (the "INVESTMENT COMPANY ACT"), or (ii) a "holding company"
or a "subsidiary company" or an "affiliate" of a holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended;
9
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 10
(t) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes;
(u) The consolidated financial statements of the Company and its
subsidiaries included in the Prospectus present fairly in all material respects
the financial position of the Company on a consolidated basis and the results of
operations and changes in financial condition as of the dates and for the
periods therein specified. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein). The
selected financial data set forth under the captions "Prospectus
Summary--Summary Consolidated Financial Data," and "Selected Consolidated
Financial Data" in the Prospectus fairly present in all material respects, on
the basis stated in the Prospectus, the information included. The other
financial, numerical and statistical information and data set forth in the
Prospectus is, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company and its subsidiaries, as applicable. The unaudited pro forma condensed
combined financial statements and the related notes thereto included in the
Prospectus present fairly, as stated therein, in all material respects the pro
forma consolidated financial position and results of operations of the Company
at the respective dates and for the respective periods indicated. The pro forma
adjustments are factually supportable. All adjustments necessary to fairly
present this pro forma information have been made;
(v) Each of (i) Ernst & Young LLP, (ii) Arthur Anderson LLP, (iii)
Pricewaterhouse Coopers LLP, (iv) Deloitte & Touche and (v) Smith Partnership,
who have certified certain financial statements of the Company, its subsidiaries
and/or the entity to be acquired in the Pending Acquisition, are each
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
10
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 11
(w) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions which would be required to be
disclosed therein by Item 404 of Regulation S-K of the Commission and each
business relationship or related party transaction described therein is a fair
and accurate description of the relationships and transactions so described;
(x) Except as disclosed in the Prospectus, each of the Company and its
subsidiaries is operating in material compliance with all laws, regulations,
administrative orders or rulings or court decrees applicable to it or to any of
its property (including without limitation those relating to environmental,
safety or similar matters, federal or state laws relating to the hiring,
promotion or pay of employees), except for violations which would not reasonably
be expected to have a Material Adverse Effect;
(y) Except as, singly or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect, (i) the Company and its subsidiaries have (A)
such permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("PERMITS") as are necessary to own, lease and operate
their properties and to conduct their businesses as presently conducted, and (B)
fulfilled and performed all of their material obligations with respect to the
Permits, and (ii) no event has occurred that would allow, or after notice or
lapse of time would allow, revocation or termination of any Permit or that would
result in any other material impairment of the rights granted to the Company or
any of its subsidiaries under any Permit, and (iii) neither the Company nor any
of its subsidiaries has knowledge that any governmental body or agency is
considering limiting, suspending or revoking any Permit;
(z) The Company and its subsidiaries own or possess adequate rights to use
all material trademarks, service marks, tradenames, trademark registrations,
service mark registrations and copyrights necessary for the conduct of their
businesses, and to the Company's knowledge, the conduct of their businesses will
not conflict with, and neither the Company nor any of its subsidiaries has
received any notice of any claim
11
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 12
of conflict with, any such rights of others (except in any such case for any
conflict that would not reasonably be expected to have a Material Adverse
Effect);
(aa) Each of the Company and its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of its subsidiaries would have any
liability; none of the Company or its subsidiaries has incurred or expects to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Section 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "pension plan" for which the
Company or any of its subsidiaries would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification, except, in each case, as would not
have a Material Adverse Effect;
(bb) There is (i) no material unfair labor practice complaint pending
against the Company or any of its subsidiaries, or, to the best knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board or any state or local labor relations board, and no material grievance or
material arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of its
subsidiaries, or, to the best knowledge of the Company, threatened against any
of them and (ii) no material strike, labor dispute, slowdown or stoppage pending
against the Company or any of its subsidiaries nor, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries, except, in
each case, as would not reasonably be expected to have a Material Adverse
Effect;
12
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 13
(cc) The Company and each of its subsidiaries has reviewed the effect of
Environmental Laws (as defined below) and the disposal of hazardous or toxic
substances, wastes, pollutants and contaminants on the business, assets,
operations and properties of the Company and each of the subsidiaries, and
identified and evaluated associated costs and liabilities (including, without
limitation, any material capital and operating expenditures required for
clean-up, closure of properties and compliance with Environmental Laws, all
permits, licenses and approvals, all related constraints on operating activities
and all potential liabilities to third parties). On the basis of such reviews,
the Company has reasonably concluded that such associated costs and liabilities
would not reasonably be expected to have a Material Adverse Effect. None of the
Company or its subsidiaries has violated any environmental, safety or similar
law or regulation applicable to it or its business or property relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), lacks
any permit, license or other approval required of it under applicable
Environmental Laws or is violating any term or condition of such permit, license
or approval, which, in any case, would reasonably be expected to, either
individually or in the aggregate, have a Material Adverse Effect;
(dd) Each of the Company and its subsidiaries has filed all material
federal, state and local income and franchise tax returns required to be filed
through the date hereof and have paid, or made adequate reserve or provision for
the payment of, all taxes shown as due thereon except in any case where such
failure would not reasonably be expected to have a Material Adverse Effect, and
the Company has no knowledge of any tax deficiency that has had (or would have)
a Material Adverse Effect;
(ee) None of the Company, its subsidiaries nor any agent thereof acting on
behalf of any of them has taken, and none of them will take, any action that
might cause this Agreement or the issuance of the Stock to violate Regulation T
(12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve;
13
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 14
(ff) The Company has delivered to the U.S. Underwriters true and correct,
executed copies of the Acquisition Agreement and there have been no amendments,
alterations, modifications or waivers thereto or in the exhibits or schedules
thereto other than those as to which the U.S. Underwriters shall previously have
been advised and shall not have reasonably objected after being furnished a copy
thereof;
(gg) The Company's present intention is to use the net proceeds received by
it from the sale of the Stock pursuant to this Agreement in the manner specified
in the Prospectus under the caption "Use Of Proceeds"; and
(hh) The Company and its subsidiaries are implementing a comprehensive
program to analyze and address the risk that the computer hardware and software
used by them may be unable to recognize and properly execute date-sensitive
functions involving certain dates prior to and any dates after December 31,
1999, and, except as disclosed in the Prospectus, reasonably believe that such
risk will be remedied on a timely basis without material expense and will not
have a material adverse effect upon the financial condition and results of
operations of the Company and its subsidiaries taken as a whole.
(ii) Since the end of its last fiscal year the Company has filed with the
Commission all documents required to have been filed by the Company pursuant to
the Securities Exchange Act of 1934, as amended. Each such document, when filed
with the Commission, conformed in all material respects to the requirements of
the Exchange Act and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(jj) Neither the Company nor, to the knowledge of the Company, any of its
officers, directors, partners, employees or affiliates has, directly or
indirectly, given or agreed to give on behalf of the Company any money, gift or
similar benefit (other than legal price or services concessions to customers) to
any customer, supplier, employee or agent of a customer or supplier, official or
employee of any governmental agency
14
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 15
(domestic or foreign), instrumentality of any government (domestic or foreign)
or other person who was, is or is reasonably likely to be in a position to help
or hinder the business of the Company (or assist the Company in connection with
any actual or proposed transaction) which would reasonably be expected to
subject the Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign), which would
reasonably be expected to have a Material Adverse Effect.
Notwithstanding the foregoing, any exceptions to the representations and
warranties contained in the Acquisition Agreement shall be deemed to be included
in the applicable representation or warranty contained in this Agreement.
2. PURCHASE BY, AND SALE AND DELIVERY TO, U.S. UNDERWRITERS. Subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
each of the U.S. Underwriters, and each of the U.S. Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price per
share of $__.__, the number of shares of U.S. Firm Stock set forth opposite the
name of such U.S. Underwriter in Schedule I hereto and (b) in the event and to
the extent that the U.S. Underwriters shall exercise the election to purchase
U.S. Optional Stock as provided below, the Company agrees to issue and sell to
each of the U.S. Underwriters, and each of the U.S. Underwriters agrees,
severally and not jointly, to purchase from the Company, at the purchase price
per share set forth in clause (a) of this Section 2, that portion of the number
of shares of U.S. Optional Stock as to which such election shall have been
exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of shares of U.S. Optional Stock by a
fraction, the numerator of which is the maximum number of shares of U.S.
Optional Stock which such U.S. Underwriter is entitled to purchase as set forth
opposite the name of such U.S. Underwriter in Schedule I hereto and the
denominator of which is the maximum number of U.S. Optional Stock that all of
the U.S. Underwriters are entitled to purchase hereunder.
15
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 16
The Company hereby grants to the U.S. Underwriters the right to purchase at
their election up to shares of U.S. Optional Stock, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Stock. Any such election to purchase
Optional Stock may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of shares of U.S. Optional Stock to be
purchased and the date on which such shares of Optional Stock are to be
delivered, as determined by you but in no event earlier than the First Time of
Delivery (as defined in Section 4 hereof) or, unless you and the Company
otherwise agree in writing, earlier than three or later than ten business days
after the date of such notice.
3. Upon the authorization by you of the release of the shares of U.S. Firm
Stock, the several U.S. Underwriters propose to offer the U.S. Firm Stock for
sale upon the terms and conditions set forth in the Prospectus.
4. TIME OF DELIVERY. (a) The U.S. Stock to be purchased by each U.S.
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as Bear, Stearns & Co. Inc. and Lehman Brothers
Inc. may request upon at least forty-eight hours' prior notice to the Company
shall be delivered by or on behalf of the Company to Bear, Stearns & Co. Inc.
and Lehman Brothers Inc. for the account of such U.S. Underwriter, against
payment by or on behalf of such U.S. Underwriter of the purchase price therefor
by wire transfer of Federal (same-day) funds to the account specified by the
Company to Bear, Stearns & Co. Inc. and Lehman Brothers Inc. at least
forty-eight hours in advance. The Company will cause the certificates
representing the U.S. Stock to be made available for checking and packaging at
least twenty-four hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of Bear, Stearns & Co. Inc., 245 Park Avenue, New
York, New York 10167 and Lehman Brothers Inc., 200 Vesey Street, New York, New
York 10285 (each a "DESIGNATED OFFICE"). The time and date of such delivery and
payment shall be, with respect to the U.S. Firm Stock, 9:30 a.m., New York City
time, on August __,
16
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 17
1999, or such other time and date as Bear, Stearns & Co. Inc., Lehman Brothers
Inc. and the Company may agree upon in writing, and, with respect to the U.S.
Optional Stock, 9:30 a.m., New York time, on the date specified by Bear, Stearns
& Co. Inc. and Lehman Brothers Inc. in the written notice given by Bear, Stearns
& Co. Inc. and Lehman Brothers Inc. of the U.S. Underwriters' election to
purchase such U.S. Optional Stock, or such other time and date as Bear, Stearns
& Co. Inc., Lehman Brothers Inc. and the Company may agree upon in writing. Such
time and date for delivery of the U.S. Firm Stock is herein called the "FIRST
TIME OF DELIVERY," such time and date for delivery of the U.S. Optional Stock,
if not the First Time of Delivery, is herein called the "SECOND TIME OF
DELIVERY," and each such time and date for delivery is herein called a "TIME OF
DELIVERY."
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Stock and any additional documents requested by the U.S. Underwriters
pursuant to Section 7(j) hereof, will be delivered at the offices of Paul,
Hastings, Janofsky & Walker LLP, 399 Park Avenue, New York, New York 10022-4697
(the "CLOSING LOCATION"), and the Stock will be delivered at a Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at 5:00 p.m., New York City time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "NEW YORK
BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company agrees with each of
the U.S. Underwriters:
17
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 18
(a) To prepare the Prospectus in a form approved, subject to the
requirements of applicable law and regulation, by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus which shall be reasonably
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Stock for offering and sale under the securities laws of
such U.S. jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Stock, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 12:00 noon, New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to
18
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 19
furnish the U.S. Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Stock and if at such time any event shall have occurred as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your request
to prepare and furnish without charge to each U.S. Underwriter and to any dealer
in securities as many copies as you may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Stock at
any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such U.S. Underwriter, to prepare and deliver
to such U.S. Underwriter as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) During the period beginning on the date hereof and continuing to and
including the date 90 days after the date of the Prospectus, not to (A) offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder,
any shares of Stock or any securities of the Company that are substantially
similar to the Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than (i) as described
in the Prospectus, (ii) as may be issued in connection with the acquisition of
Apollo, (iii) as may be issued in connection with acquisitions other than
Apollo, provided that the persons to whom such securities are issued agree not
to publicly resell such securities during such 90-day period, and (iv) pursuant
to employee and/or director stock option plans existing on the date of this
agreement, or upon the
19
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 20
conversion or exchange of convertible or exchangeable securities outstanding as
of the date hereof or granted pursuant to such existing employee or director
stock option plans), or (B) after the date hereof, waive any provision in the
Apollo Acquisition Agreement restricting the transfer of the securities to be
issued thereunder, in either case without the prior written consent of Bear,
Stearns & Co. Inc. and Lehman Brothers Inc. acting together, which shall not be
unreasonably withheld;
(e) To use its best efforts to list the Stock on the New York Stock Exchange
("NYSE"); and
(f) If the Company elects to rely upon Rule 462(b), the Company shall file a
Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act.
6. PAYMENT OF EXPENSES. The Company covenants and agrees with the several
U.S. Underwriters that the Company will pay or cause to be paid the following:
(i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Stock under the Act and
all other reasonable expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof to the U.S. Underwriters and dealers; (ii) the cost of
printing or copying any Agreement among U.S. Underwriters, this Agreement, the
Blue Sky Memorandum, closing documents (including any compilations thereof) and
any other documents in connection with the offering, purchase, sale and delivery
of the Stock; (iii) all expenses in connection with the qualification of the
Stock for offering and sale under state securities laws as provided in Section
5(b) hereof, including the reasonable fees and disbursements of counsel for the
U.S. Underwriters in connection with such qualification and in connection with
the
20
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 21
Blue Sky survey; (iv) all fees and expenses in connection with listing the Stock
on the NYSE; (v) the filing fees incident to, and the fees and disbursements of
counsel for the U.S. Underwriters in connection with, securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Stock; (vi) the cost of preparing stock certificates; (vii) the
cost and charges of any transfer agent or registrar; and (viii) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, and Sections 8, 9 and 13
hereof, the U.S. Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Stock by them, and any advertising expenses connected with any offers they
may make.
7. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The obligations of the U.S.
Underwriters hereunder, as to the Stock to be delivered at each Time of
Delivery, shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the Company herein are,
at and as of such Time of Delivery, true and correct, the condition that the
Company shall have performed all of its obligations hereunder therefore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have been filed by 10:00 P.M., Washington, D.C.
time, on the date of this Agreement; no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
21
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 22
(b) Paul, Hastings, Janofsky & Walker LLP, counsel for the Underwriters,
shall have furnished to you such written opinion or opinions, dated such Time of
Delivery, with respect to such matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Winston & Strawn, special counsel for the Company, shall have furnished
to you their written opinion, dated such Time of Delivery, substantially in the
form of Exhibit A, attached hereto.
(d) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at such Time of Delivery, (i) Ernst & Young LLP,
(ii) Arthur Andersen LLP, (iii) PricewaterhouseCoopers LLP, (iv) Deloitte &
Touche Chartered Accountants & Registered Auditors, shall have furnished to you
a letter or letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you;
(e)(i) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus there shall
not have been any material change in the capital stock or long-term debt (other
than borrowings in the ordinary course of business) of the Company or any of its
subsidiaries or any material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the Representatives
so material and
22
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 23
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the U.S. Stock being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(f) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the NYSE; (ii) a suspension or material limitation in trading in
the Company's securities on the NYSE; (iii) a general moratorium on commercial
banking activities declared by either Federal or New York State authorities; or
(iv) the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in clauses (i), (ii), (iii) or (iv), in the
judgment of the U.S. Representatives, makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Stock being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(g) The Stock to be sold at such Time of Delivery shall have been duly
listed for quotation on the NYSE;
(h) The Company has obtained and delivered to the U.S. Underwriters executed
copies of an agreement from the stockholders listed on Schedule III hereto,
substantially in the form set forth as Exhibit B;
(i) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement;
(j) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company reasonably
satisfactory to you as to the accuracy, in all material respects, of the
representations and warranties of the Company herein at and as of such Time of
Delivery, as to the
23
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 24
performance by the Company, in all material respects, of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, as to the
matters set forth in subsections (a), (e) and (g) of this Section and as to such
other matters as you may reasonably request.
8. INDEMNITY. (a) The Company agrees to indemnify and hold harmless each
U.S. Underwriter and each person, if any, who controls any U.S. Underwriter
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation) to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, as originally filed or any amendment
thereof, or any related Preliminary Prospectus or the Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case (i) to
the extent but only to the extent that any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any U.S. Underwriter expressly for use therein and (ii) with respect
to any preliminary prospectus or preliminary prospectus supplement to the extent
that any such loss, claim, damage or liability results from the fact that an
U.S. Underwriter sold Stock to a person as to whom it shall be established that
there was not sent or given, at or prior to written confirmation of such sale, a
copy of the final prospectus or prospectus supplement as then amended or
supplemented in any case where such delivery is required by the
24
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 25
Securities Act if the Company has previously furnished copies thereof in
sufficient quantity to such U.S. Underwriter and with sufficient time to effect
a delivery, and the loss, claim, damage or liability of the U.S. Underwriters
results from an untrue statement or omission of a material fact contained in the
preliminary prospectus or preliminary prospectus supplement which was corrected
in the prospectus or prospectus supplement as then amended, and such correction
would have cured the defect giving rise to such loss, claim, damage or
liability. This indemnity agreement will be in addition to any liability which
the Company may otherwise have, including under this Agreement.
(b) Each U.S. Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and expenses incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or Litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in either Registration Statement, as
originally filed or any amendment thereof, or any related preliminary
prospectus, preliminary prospectus supplement or prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any U.S. Underwriter expressly for use therein; provided, however,
that in no case shall any
25
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 26
U.S. Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Stock purchased by such U.S. Underwriter
hereunder. This indemnity will be in addition to any Liability which any U.S.
Underwriter may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under Subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve the indemnifying party from any
liability which it may have under this Section 8, except to the extent that the
indemnifying party has been prejudiced in any material respect by such failure
or from any liability that it may have otherwise). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to have charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have been advised by counsel that there
may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this Subsection to the contrary notwithstanding, an indemnifying party shall
26
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 27
not be liable for any settlement of any claim or action effected without its
written consent; provided, however, that such consent was not unreasonably
withheld.
9. CONTRIBUTION. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 8 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the U.S. Underwriters
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the U.S. Underwriters, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, officers of the Company who signed the Registration Statement and directors
of the Company) as incurred to which the Company and one or more of the U.S.
Underwriters may be subject, in such proportions as is appropriate to reflect
the relative benefits received by the Company and the U.S. Underwriters from the
offering of the Stock or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 8 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the U.S. Underwriters in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the U.S.
Underwriters on the other hand shall be deemed to be in the same proportion as
(x) the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y) the
underwriting discounts and commissions received by the U.S. Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company
27
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 28
and the U.S. Underwriters 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 or the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the U.S. Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the U.S. 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 above. Notwithstanding
the provisions of this Section 9, (i) in no case shall any U.S. Underwriter be
liable or responsible for any amount in excess of the underwriting discount
applicable to the Stock purchased by such U.S. Underwriter hereunder, and (ii)
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. Notwithstanding the
provisions of this Section 9 and the preceding sentence, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Stock underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such U.S.
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of this
Section 9, each person, if any, who controls an U.S. Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as such U.S. Underwriter, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) of this Section 9. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to
28
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 29
so notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 9 or otherwise, except to the extent the contributing party has been
prejudiced in any material respect by such failures. No party shall be Liable
for contribution with respect to any action or claim settled without its
consent; provided, however, that such consent was not unreasonably withheld.
10. DEFAULT BY A U.S. UNDERWRITER. (a) If any U.S. Underwriter or U.S.
Underwriters shall default in its or their obligation to purchase U.S. Firm
Stock or U.S. Optional Stock hereunder, and if the shares of U.S. Firm Stock or
U.S. Optional Stock with respect to which such default relates do not (after
giving effect to arrangements, if any, made by you pursuant to subsection (b)
below) exceed in the aggregate 10% of the total number of shares of U.S. Firm
Stock or U.S. Optional Stock, the shares of U.S. Firm Stock or U.S. Optional
Stock to which the default relates shall be purchased by the non-defaulting U.S.
Underwriters in proportion to the respective proportions which the numbers of
U.S. Firm Stock set forth opposite their respective names in Schedule I hereto
bear to the aggregate number of U.S. Firm Stock set forth opposite the names of
the non-defaulting U.S. Underwriters.
(b) In the event that such default relates to more than 10% of the total
number of shares of U.S. Firm Stock or U.S. Optional Stock, as the case may be,
you may in your discretion arrange for yourself or for another party or parties
including any non-defaulting U.S. Underwriter or U.S. Underwriters who so agree)
to purchase such U.S. Firm Stock or U.S. Optional Stock, as the case may be to
which such default relates on the terms contained herein. In the event that
within five calendar days after such a default you do not arrange for the
purchase of the U.S. Firm Stock or U.S. Optional Stock, as the case may be, to
which such default relates as provided in this Section 10, this Agreement or, in
the case of a default with respect to the U.S. Optional Stock, the obligations
of the U.S. Underwriters to purchase and to sell the U.S. Optional Stock shall
thereupon terminate, without liability on the part of U.S. Underwriters with
respect thereto (except in each case as provided in Section 5, 7(a) and 8
hereof), but nothing in
29
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 30
this Agreement shall relieve a defaulting U.S. Underwriter or U.S. Underwriters
of its ortheir liability, if any, to the Company or the other U.S. Underwriters
for damages occasioned by its or their default hereunder.
(c) In the event that the U.S. Firm Stock or U.S. Optional Stock to which
the default relates are to be purchased by the non-defaulting U.S. Underwriters,
or are to be purchased by another party or parties as aforesaid, shall have the
right to postpone the Closing Date, as the case may be, for a period not
exceeding five business days in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of U.S. Underwriters' Counsel, may thereby be made necessary or
advisable. The term "U.S. Underwriter" as used in this Agreement shall include
any party substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such U.S. Firm Stock
and U.S. Optional Stock.
11. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and
warranties, covenants and agreements of the U.S. Underwriters and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 8 and the contribution agreements
contained in Section 9, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any U.S. Underwriter or
any controlling person thereof or by or on behalf of the Company, any of its
officers and directors, or any controlling person of the Company, and shall
survive delivery of and payment for the Stock to and by the U.S. Underwriters.
The representations contained in Section 1 and the agreements contained in
Sections 6, 8, 9, 12(d) and 15 hereof shall survive the termination of this
Agreement, including termination pursuant to Section 10 or 12 hereof.
30
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 31
12. EFFECTIVE DATE OF AGREEMENT; TERMINATION. (a) This Agreement shall
become effective upon the execution and delivery of a counterpart hereof by each
of the parties hereto.
(b) The U.S. Underwriters shall have the right to terminate this Agreement
at any time prior to the applicable Time of Delivery or the obligations of the
U.S. Underwriters to purchase the Optional Shares at any time prior to the
Applicable Time of Delivery, as the case may be, if on or prior to such date,
(i) the Company shall have failed, refused or been unable to perform in any
material respect any agreement on its part to be performed hereunder, (ii) any
other condition to the obligations of the U.S. Underwriters hereunder as
provided in Section 7 is not fulfilled when and as required in any material
respect, (iii) in the reasonable judgment of the U.S. Underwriters any change or
development having a Material Adverse Effect shall have occurred since the
respective dates as of which information is given in the Prospectus, other than
as set forth in the Prospectus, (iv) any downgrading shall have in the rating
accorded the Company's debt securities by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Securities Act, or any such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities, or
(v)(A) any domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the U.S. Underwriters will in the immediate
future materially disrupt, the market for the Company's securities or for
securities in general; or (B) trading in securities generally on the NYSE or
quotations on the Nasdaq shall have been suspended or materially limited, or
minimum or maximum prices for trading shall have been established, or maximum
ranges for prices for securities shall have been required, on such exchange, or
by such exchange or other regulatory body or governmental authority having
jurisdiction; or (C) a banking moratorium shall have been declared by federal or
state authorities, or a moratorium in foreign exchange trading by major
international banks or persons shall have been declared; or (D) there is an
outbreak or escalation of armed hostilities involving the United States on or
after the date hereof, or if there has been a declaration by the United
31
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 32
States of a national emergency or war, the effect of which shall be, in the U.S.
Underwriters' judgment, to make it inadvisable or impracticable to proceed with
the offering, sale and delivery of the Firm Shares or the Optional Shares, as
the case may be, on the terms and in the manner contemplated by the Prospectus;
or (E) there shall have been such a material adverse change in general economic,
political or financial conditions or if the effect of international conditions
on the financial markets in the United States shall be such as, in the U.S.
Representatives judgment, makes it inadvisable or impracticable to proceed with
the offering, sale and delivery of the Firm Shares or the Optional Shares, as
the case may be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 12 shall be by
telephone, telex, telegraph or telephonic facsimile, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any of the provisions
hereof (other than pursuant to Section 10(b) or 12(b) hereof), or if the sale of
the Stock provided for herein is not consummated because any condition to the
obligations of the U.S. Underwriters set forth herein is not satisfied (other
than the condition set forth in Section 7(b)) or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof, the Company will, subject to demand by the
U.S. Underwriters, reimburse the U.S. Underwriters for all out-of-pocket
expenses (including the fees and expenses of their counsel), incurred by the
U.S. Underwriters in connection herewith.
13. If this Agreement shall be terminated pursuant to Section 10 hereof, the
Company shall not then be under any liability to any U.S. Underwriter except as
provided in Sections 6 and 8 hereof.
14. NOTICES. In all dealings hereunder, you shall act on behalf of each of
the U.S. Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any U.S.
Underwriter made or given
32
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 33
by you jointly or by Bear, Stearns & Co. Inc. on behalf of you as the
representatives. All statements, requests, notices and agreements hereunder
shall be in writing, and if to the U.S. Underwriters shall be delivered or sent
by mail, telex or facsimile transmission to you as the representatives in care
of Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167,
Attention: Registration Department; and if to the Company shall be delivered or
sent by mail to the address of the Company set forth in the Registration
Statement, Attention: Secretary; provided, however, that any notice to a U.S.
Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such U.S. Underwriter at its address set
forth in its U.S. Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
15. PARTIES. This Agreement shall be binding upon, and inure solely to the
benefit of, the U.S. Underwriters, the Company and, to the extent provided in
Sections 8 and 9 hereof, the officers and directors of the Company and each
person who controls the Company or any U.S. Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the U.S. Stock from any U.S. Underwriter shall be deemed a
successor or assign by reason merely of such purchase.
16. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. As used herein, the term
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
17. GOVERNING LAW; CONSTRUCTION. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
ITS CONFLICTS OF LAW PROVISIONS.
33
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 34
18. COUNTERPARTS. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
Signature page(s) follow
34
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 35
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the U.S. Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the U.S. Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the U.S. Underwriters is pursuant to the authority set forth in a form
of Agreement among U.S. Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
SFX ENTERTAINMENT, INC.
By: ________________________
Name: Howard J. Tytel
Title: Executive Vice President
35
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 36
Accepted as of the date hereof:
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the Several U.S. Underwriters
BEAR, STEARNS & CO. INC.
By: ___________________________
Name:
Title:
LEHMAN BROTHERS INC.
By: ___________________________
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By: ___________________________
Name:
Title:
36
<PAGE>
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.,
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As representatives of the several
U.S. Underwriters named in
Schedule I hereto
August [__], 1999
Page 37
SG COWEN SECURITIES CORPORATION
By: ___________________________
Name:
Title:
BANCBOSTON ROBERTSON STEPHENS INC.
By: ___________________________
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By: ___________________________
Name:
Title:
U.S. Underwriting signature page(s)
37
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
U.S.
OPTIONAL
TOTAL NUMBER STOCK TO BE
OF SHARES OF PURCHASED
U.S. FIRM IF MAXIMUM
STOCK TO BE OPTION
U.S. UNDERWRITER PURCHASED EXERCISED
----------------------- --------------------
<S> <C> <C>
Bear, Stearns & Co. Inc.......................................
Lehman Brothers Inc. .........................................
Morgan Stanley & Co. Incorporated.............................
SG Cowen Securities Corporation............................... ----------------------- --------------------
BancBoston Robertson Stephens Inc............................. ----------------------- --------------------
Prudential Securities Incorporated............................ ----------------------- --------------------
TOTAL...............................................
======================= ====================
</TABLE>
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
INTERNATIONAL
OPTIONAL
TOTAL NUMBER OF STOCK TO BE
SHARES OF PURCHASED IF
INTERNATIONAL MAXIMUM
FIRM STOCK TO BE OPTION
INTERNATIONAL MANAGER PURCHASED EXERCISED
--------------------------- -------------------------
<S> <C> <C>
Bear, Stearns International Limited...................
Lehman Brothers International (Europe)................
Morgan Stanley & Co. International Limited ...........
Societe Generale SA ..................................
BancBoston Robertson Stephens International
Ltd...................................................
Prudential-Bache Securities (U.K.) Inc. ..............
TOTAL.......................................
========================== =========================
</TABLE>
<PAGE>
SCHEDULE III
List of required Lock-Up Letters:
Robert F.X. Sillerman
Michael G. Ferrel
Brian E. Becker
David Falk
Howard J. Tytel
Thomas P. Benson
Richard A. Liese
D. Geoffrey Armstrong
James F. O'Grady, Jr.
Paul Kramer
Edward F. Dugan
John D. Miller
John J. Boyle
[May be revised]
<PAGE>
EXHIBIT A
August __, 1999
Bear, Stearns & Co. Inc.
Lehman Brothers Inc.,
As Representatives
for each of the several
U.S. Underwriters
Bear, Stearns International Limited
Lehman Brothers International (Europe)
As Representatives
for each of the several
International Managers
Ladies and Gentlemen:
We have acted as special counsel to SFX Entertainment, Inc., a Delaware
corporation (the "COMPANY"), in connection with the offer and sale of 7,500,000
shares (the "SHARES") of the Company's Class A Common Stock, par value $.01 per
share (the "COMMON STOCK"). Of the 7,500,000 shares of Common Stock being issued
and sold, (i) [_________] shares are being sold pursuant to the Underwriting
Agreement dated August __, 1999 (the "U.S. UNDERWRITING AGREEMENT"), among the
Company and the several Underwriters named in Schedule I hereto (the "U.S.
UNDERWRITERS") and (ii) _____ shares are being sold pursuant to the Underwriting
Agreement dated August __, 1999 (the "INTERNATIONAL UNDERWRITING AGREEMENT" and,
together with the U.S. Underwriting Agreement, the "UNDERWRITING AGREEMENTS"),
among the Company and the several International Managers named in Schedule II
hereto (the "INTERNATIONAL MANAGERS").
This opinion letter is being furnished to you pursuant to Section ____
of each of the Underwriting Agreements. Capitalized terms used but not defined
herein shall have the meanings set forth in the Underwriting Agreements.
In connection with this opinion letter, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement on Form S-3 (File No. 333-84371)
relating to the offering of the Shares, as filed with the Securities and
Exchange Commission (the "COMMISSION") on August __, 1999 under the Securities
Act of 1933, (as so amended, the "REGISTRATION
<PAGE>
STATEMENT"); (ii) the final prospectus dated August __, 1999 relating to the
Shares offered and sold in the United States and Canada in the form filed with
the Commission on August __, 1999 (such final prospectus, including documents
incorporated by reference therein, being hereinafter referred to as the "U.S.
PROSPECTUS"); (iii) the final prospectus dated August __, 1999 relating to the
Shares offered and sold outside of the United States and Canada in the form
filed with the Commission on August __, 1999 (such final prospectus, including
documents incorporated by reference therein, being hereinafter referred to as
the "INTERNATIONAL PROSPECTUS" and, together with the U.S. Prospectus, the
"PROSPECTUSES"); (iv) the certificate of incorporation or certificate of
formation and limited liability company agreement, in each case as applicable,
of the Company and each of the subsidiaries of the Company listed on Schedule
III hereto (the "LISTED SUBSIDIARIES"), each as currently in effect; (v) the
By-Laws of the Company and each of the Listed Subsidiaries, each as currently in
effect; (vi) certain resolutions adopted by the Board of Directors of the
Company and a Special Committee thereof relating to, among other things, the
issuance and the sale of the Shares; and (vii) execution copies of the
Underwriting Agreements. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company and
such certificates of public officials, certificates of officers or
representatives of the Company and others, and such other agreements, documents,
instruments, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof. As to any
facts material to the opinions expressed herein which we did not independently
establish or verify, we have relied upon oral and written statements and
representations of officers and other representatives of the Company and others.
Members of our firm are admitted to the bar in the State of New York,
and we do not express any opinion as to the laws of any other jurisdiction other
than the General Corporation Law of the State of Delaware and the Delaware
Limited Liability Company Act and the federal laws of the United States of
America to the extent referred to specifically herein.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses. The Company is duly qualified to do
business and is in
2
<PAGE>
good standing as a foreign corporation in each jurisdiction in which the nature
of its business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or the condition (financial or otherwise) of the Company and its
direct and indirect subsidiaries, taken as a whole (a "MATERIAL ADVERSE
EFFECT").
2. Each Listed Subsidiary is validly existing and in good standing in
the jurisdiction of its organization indicated on Schedule III hereto, with full
corporate or limited liability company power, as applicable, and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectuses, except where the failure to be in good standing would not
have a Material Adverse Effect.
3. The Company has the authorized capitalization set forth in the
Prospectuses, and the Shares to be issued and sold by the Company to the U.S.
Underwriters and the International Managers pursuant to the Underwriting
Agreements have been duly and validly authorized and, when duly countersigned by
the Company's transfer agent and registrar and issued and delivered in
accordance with the provisions of the Underwriting Agreements, will be duly and
validly issued and fully paid and non-assessable. The Shares conform to the
description of the Common Stock in the Prospectuses.
4. The Underwriting Agreements have been duly authorized, executed, and
delivered by the Company, are legally valid and binding obligations of the
Company, and are enforceable against the Company in accordance with their terms,
except that (a) the enforceability thereof may be subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws, now or hereafter in effect, relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity) and (b) Federal and state
securities laws or the public policy underlying such laws may limit the right to
indemnity and contribution thereunder. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or filing
with, any Federal, state, local or other governmental authority or any court or
other tribunal is required by the Company for the execution, delivery, or
performance of the Underwriting Agreements by the Company (except filings under
the Act and with the New York Stock Exchange which have been made and consents,
authorizations, permits, orders and other matters required by the National
Association of Securities Dealers, Inc. or under "blue sky" or state securities
laws, as to which we express no opinion).
5. Except as disclosed in the Prospectuses, the execution, delivery and
performance of the Underwriting Agreements by the Company and the issuance and
sale of the Shares thereunder, will not (A) conflict with or constitute a breach
of any of
3
<PAGE>
the terms or provisions of, or a default under, the certificate of incorporation
or by-laws of the Company or of the certificate of incorporation or certificate
of formation and limited liability company agreement, as applicable, or by-laws
of any of the Listed Subsidiaries; (B) to our knowledge, require any consent or
approval (which has not been obtained) of the parties to, or conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
any agreement or other instrument of the Company filed as an exhibit to the
Registration Statement pursuant to Item 601(b)(10) of Regulation S-K under the
Act; (C) to our knowledge, violate or conflict with any law of the United States
of America or the State of New York applicable to the Company, any of the Listed
Subsidiaries or their respective property (provided that we express no opinion
on the rules or regulations of the National Association of Securities Dealers,
Inc. or the "blue sky" or state securities laws of any state or foreign
jurisdiction), except, in the case of clauses (B) and (C) above, such as would
not, either singly or in the aggregate, have a Material Adverse Effect or
prevent the Company from performing its obligations pursuant to the Underwriting
Agreements.
6. The statements contained in the Prospectuses under the caption
"Description of Capital Stock", insofar as they purport to describe the
provisions of the documents referred to therein, are accurate, complete and fair
in all material respects.
7. To our knowledge, other than as set forth in the Prospectuses, there
are no legal or governmental proceedings pending to which the Company or any of
the Listed Subsidiaries is a party or to which any property of the Company or
any of the Listed Subsidiaries is subject which would reasonably be expected
to have a Material Adverse Effect.
8. The Company is not and, after giving effect to the offering and sale
of the Shares, will not be (i) an "investment company" or an entity "controlled"
by an "investment company", as such terms are defined in the Investment Company
Act of 1940, as amended or (ii) a "holding company" or a "subsidiary company" or
an "affiliate" of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
9. To our knowledge, the Registration Statement has been declared
effective by the Commission and no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission. The Registration Statement,
as of its effective date, and the Prospectuses, as of their respective dates
(other than the financial statements, schedules and other financial and
accounting information included in or excluded from the Registration Statement
or the Prospectuses, as to which we express no opinion), comply as to form in
all material respects with the requirements of the Act and the rules and
regulations of the Commission thereunder. The documents specifically
incorporated by reference in the Prospectuses prior to the date hereof (other
than the financial statements, schedules and other
4
<PAGE>
financial and accounting information included therein or excluded therefrom, as
to which we express no opinion) at the time they were filed with the Commission,
complied as to form in all material respects with the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
In addition, we have participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the U.S. Underwriters and the
International Managers and their counsel at which the contents of the
Registration Statement, the Prospectuses and related matters were discussed and,
although we are not passing upon and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses and have made no independent check or
verification thereof except for those made under the caption "Description of
Capital Stock" in the Prospectuses (to the extent referred to in paragraph 6
hereof), on the basis of the foregoing, no facts have come to our attention that
have led us to believe that (i) the Registration Statement, at the time it
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (other than the information omitted therefrom
in reliance on Rule 430A under the Act) or (ii) either of the Prospectuses, as
of their respective dates and as of the date hereof, contained an untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that we express no opinion or belief as
to the financial statements, schedules and other financial, accounting and
statistical information included in or excluded from the Registration Statement
or the Prospectuses.
The foregoing opinions are subject to the following assumptions,
qualifications and limitations:
(A) We have relied, as to matters of fact, to the extent we deemed
proper, on certificates of responsible officers of the Company and the Listed
Subsidiaries and public officials.
(B) Any statement or opinion set forth herein that is qualified by the
phrase "to our knowledge" or any similar phrase, is intended to indicate that,
during the course of our limited representation of the Company in the subject
transaction, no information that would give actual knowledge of the inaccuracy
of such statement or opinion has come to the attention of any lawyer who has
devoted substantive attention to the subject transaction and who is still
currently employed by or a partner of Winston & Strawn. We have not undertaken
any independent investigation to determine the accuracy of any such statement or
opinion and no inference as to our knowledge of any matters bearing on the
accuracy of any such statement or opinion should be drawn from the fact of our
representation of the Company.
5
<PAGE>
(C) In rendering opinions involving a concept of materiality, we have
relied exclusively in such determination on officers of the Company.
(D) We express no opinion as to compliance of the Registration
Statement, the Prospectuses or the documents incorporated by reference into the
Prospectuses with Rule 421 of the Act.
This opinion letter is as of the date hereof and we undertake no, and
disclaim any, obligation to advise you of any changes in any matter set forth
herein. This opinion letter is furnished to you solely for your benefit in
connection with the closing under the Underwriting Agreements occurring today
and is not to be used, circulated, quoted or otherwise referred to for any other
purpose without our express prior written consent.
6
<PAGE>
EXHIBIT B
LOCK UP LETTER AGREEMENT
August _____, 1999
SFX ENTERTAINMENT, INC.
650 Madison Avenue
16th Floor
New York, New York 10022
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the
several Underwriters
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
and
c/o Lehman Brothers Inc.
200 Vesey Street
New York, New York 10285
BEAR, STEARNS INTERNATIONAL LIMITED
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SOCIETE GENERALE SA
BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LTD
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
As Representatives of the
several International Managers
c/o Bear, Stearns International Limited
245 Park Avenue
New York, New York 10167
and
c/o Lehman Brothers International (Europe)
200 Vesey Street
<PAGE>
New York, New York 10285
Ladies and Gentlemen:
The undersigned understands that Bear, Stearns & Co. Inc., Lehman
Brothers Inc., Morgan Stanley & Co. Incorporated, SG Cowen Securities
Corporation, BancBoston Robertson Stephens Inc., and Prudential Securities
Incorporated, as the U.S. representatives of the several U.S. underwriters, and
Bear, Stearns International Limited, Lehman Brothers International (Europe),
Morgan Stanley & Co. International Limited, Societe Generale SA, BancBoston
Robertson Stephens International Ltd, and Prudential-Bache Securities (U.K.)
Inc., as the lead managers (together with the U.S. representatives, the
"REPRESENTATIVES") of the several International Managers (together with the U.S.
underwriters, the "UNDERWRITERS"), propose to enter into a U.S. underwriting
agreement (the "U.S. UNDERWRITING AGREEMENT") and an international underwriting
agreement (the "INTERNATIONAL UNDERWRITING AGREEMENT"), respectively, with SFX
Entertainment, Inc. (the "COMPANY") providing for the public offering by the
Underwriters, including the Representatives, of Class A Common Stock, par value
$.01 per share (the "CLASS A COMMON STOCK"), of the Company (the "PUBLIC
OFFERING"). Capitalized terms not defined herein shall have the meaning given
them in the U.S. Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and
undertake the Public Offering of the Company's Class A Common Stock and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the undersigned agrees that, without the prior written consent of Bear, Stearns
& Co., Inc. and Lehman Brothers Inc., he, she or it will not, without the prior
written consent of Bear, Stearns & Co. Inc. and Lehman Brothers Inc., during the
period commencing on the date hereof and ending 60 days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option to contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of the Class A Common Stock, the Company's Class B Common
Stock, par value $.01 per share (the "CLASS B COMMON STOCK" and, together with
the holders of the Class A Common Stock, the "COMMON STOCK"), or any securities
convertible into or exercisable or exchangeable for Common Stock or any right to
acquire Common Stock, or (ii) enter into any swap or similar agreement that
transfers, in whole or in part, the economic risk of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing provisions shall not apply to (i) exercise of options
or warrants, (ii) transfers, without consideration, of the Common Stock or any
securities convertible into, or exercisable or exchangeable for Common Stock to
family members or to one or more trusts established for the benefit of the
undersigned or one or more family members, provided that the transferee executes
and delivers to Bear, Stearns & Co. Inc. and Lehman Brothers Inc., an
<PAGE>
agreement whereby the transferee agrees to be bound by all of the foregoing
terms and provisions, (iii) the conversion of Class B Common Stock into Class A
Common Stock, or (iv) the pledge of Common Stock to secure obligations of the
undersigned or his family members or any trust established for the undersigned
or one or more family members, provided that the pledgee is notified of the
restrictions contained herein.
In addition, the undersigned agrees that the Company may, and that the
undersigned will, (i) with respect to any shares of Common Stock for which the
undersigned is the record holder, cause the transfer agent for the Company to
note stop-transfer instructions with respect to such shares of Common Stock
consistent with the foregoing paragraph on the transfer books and records of the
Company and (ii) with respect to any shares of Common Stock for which the
undersigned is the beneficial holder but not the record holder, cause the record
holder of such shares of Common Stock to cause the transfer agent for Company to
note stop-transfer instructions with respect to such shares of Common Stock
consistent with the foregoing paragraph on the transfer books and records of the
Company.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this letter agreement, and that, upon
request, the undersigned will execute any additional documents necessary or
desirable in connection with the enforcement hereof. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any obligations of the undersigned shall be binding upon the
heirs, personal representatives, successors, and assigns of the undersigned.
Very truly yours,
------------------------------
- -----------------------------
(Name - Please Type)
- -----------------------------
- -----------------------------
- -----------------------------
(Address)
- --------------------------------------
(Social Security or Taxpayer I.D. No.)
<PAGE>
PHJ&W DRAFT
8/13/99
SFX ENTERTAINMENT, INC.
CLASS A COMMON STOCK
(par value $.01 per share)
INTERNATIONAL UNDERWRITING AGREEMENT
August __, 1999
BEAR, STEARNS INTERNATIONAL LIMITED
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SOCIETE GENERALE SA
BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LIMITED
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
As Representatives of the several
International Managers named in
Schedule I hereto,
c/o Bear, Stearns International Limited
One Canada Square
London E14 5AD
United Kingdom
and
c/o Lehman Brothers International (Europe)
One Broadgate
London EC2M 7HA
United Kingdom
Ladies and Gentlemen:
SFX Entertainment, Inc., a Delaware corporation (the "COMPANY"), proposes
to sell, pursuant to the terms of this Agreement, to the several underwriters
named in Schedule I hereto (the "INTERNATIONAL MANAGERS," or, each, an
"INTERNATIONAL MANAGER"), an aggregate of ____________ shares of Class A Common
Stock, $.01 par value (the "COMMON STOCK") of the Company. The aggregate of
shares so proposed to be sold is hereinafter referred to as the "INTERNATIONAL
FIRM STOCK." The Company also proposes to sell to the International Managers,
upon the terms and conditions set forth in Section 2 hereof, up to an additional
__________ shares of Common Stock (the
<PAGE>
"INTERNATIONAL OPTIONAL STOCK") solely to cover over-allotments in connection
with the sale of the International Firm Stock. The International Firm Stock and
the International Optional Stock are hereinafter collectively referred to as the
"INTERNATIONAL STOCK." Bear, Stearns International Limited ("BEAR, STEARNS"),
Lehman Brothers International (Europe) ("LEHMAN"), Morgan Stanley & Co.
International Limited, Societe Generale SA, BancBoston Robertson Stephens
International Limited and Prudential-Bache Securities (U.K.) Inc. are acting as
representatives of the several International Managers and in such capacity are
hereinafter referred to as the "INTERNATIONAL REPRESENTATIVES."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. UNDERWRITING AGREEMENT") providing
for the sale to the several underwriters named in Schedule II hereto (the "U.S.
UNDERWRITERS," or, each, a "U.S. UNDERWRITER"), of an aggregate of _________
shares of Common Stock of the Company. The aggregate of ________ shares so
proposed to be sold is hereinafter referred to as the "U.S. FIRM STOCK." The
Company also proposes to sell to the U.S. Underwriters, upon the terms and
conditions set forth in Section 2 thereof, up to an additional _____ shares of
Stock (the "U.S. OPTIONAL STOCK"). The U.S. Firm Stock and the U.S. Optional
Stock are hereinafter collectively referred to as the "U.S. STOCK." Bear,
Stearns & Co. Inc., Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, SG
Cowen Securities and Prudential Securities Incorporated are acting as
representatives of the several U.S. Underwriters and in such capacity are
hereinafter referred to as the "U.S. REPRESENTATIVES." The respective closings
under this Agreement and the U.S. Underwriting Agreement are hereby expressly
made conditional upon one another.
The International Managers and U.S. Underwriters are hereinafter
collectively referred to as the "UNDERWRITERS." The International Stock and the
U.S. Stock are hereinafter collectively referred to as the "STOCK." The
International Firm Stock and the U.S. Firm Stock are hereinafter collectively
referred to as the "FIRM STOCK." The International Optional Stock and the U.S.
Optional Stock are hereinafter referred to as the "OPTIONAL STOCK." Two forms of
prospectus are to be used in connection with the offering and sale of shares of
Common Stock contemplated by the foregoing, one relating to the U.S. Stock and
the other relating to the International Stock. The latter form of prospectus
will be identical to the former except for certain substitute pages as included
in the registration statement and amendments thereto. Reference hereinto any
prospectus, whether in preliminary or final form, and whether as amended or
supplemented, shall include both the U.S. and the international versions
thereof.
The Company understands that the International Managers and the U.S.
Underwriters will concurrently enter into an agreement between the U.S. and
international underwriting syndicates of even date herewith (the "AGREEMENT
BETWEEN U.S. UNDERWRITERS AND INTERNATIONAL MANAGERS") providing for the
coordination of certain transactions among the U.S. Underwriters and
International Managers and that, pursuant thereto and subject to the conditions
set forth therein, the U.S. Underwriters may
2
<PAGE>
purchase from the International Managers a portion of the International Stock or
sell to the International Managers a portion of the U.S. Stock. The Company
understands that any such purchases and sales between the U.S. Underwriters and
the International Managers shall be governed by the Agreement Between U.S.
Underwriters and International Managers and shall not be governed by the terms
of this Agreement or the U.S. Underwriting Agreement.
The Company understands that the International Managers propose to make a
public offering of the International Stock as soon as the International
Representatives deem advisable after this Agreement has been executed and
delivered.
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several International Managers that:
(a) A registration statement on Form S-3 (File No. 333-84371),
including all amendments thereto (the "INITIAL REGISTRATION STATEMENT"), in
respect of the Stock has (i) been filed with the Securities and Exchange
Commission (the "COMMISSION") thereunder and (ii) been declared effective by the
Commission in such form. Other than a registration statement, if any, increasing
the size of the offering (a "RULE 462(B) REGISTRATION STATEMENT") filed pursuant
to Rule 462(b) under the Securities Act of 1933, as amended (the "ACT"), which
became effective upon filing, no other document (other than documents
specifically incorporated by reference therein) with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and (iv)
no stop order suspending the effectiveness of the Initial Registration Statement
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Act is hereinafter called
a "PRELIMINARY PROSPECTUS"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act and including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the Initial Registration Statement at the time it
was declared effective or such part of the Rule 462(b) Registration Statement,
if any, became or hereafter becomes effective, each as amended at the time such
part of the initial Registration Statement became effective is hereinafter
collectively called the "REGISTRATION STATEMENT"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Act, is hereinafter
called the "PROSPECTUS");
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will
3
<PAGE>
conform, in all material respects, to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through Bear, Stearns and Lehman expressly for use
therein;
(c) None of the Company nor any of its subsidiaries has taken, nor will
any of them take, directly or indirectly, any action designed to, or that could
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Stock to facilitate the sale and resale of the Stock;
(d) Except as described in the Prospectus, neither the Company nor its
subsidiaries has sustained since the date of the latest audited financial
statements included in the Prospectus any material loss or interference with
their respective businesses, taken as a whole, from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been any material change in the capital stock or long term debt (other than
borrowings in the ordinary course of business) of the Company or any of its
subsidiaries, or any material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Prospectus;
(e) To the Company's knowledge, as of the date hereof, the
representations and warranties in the Apollo Acquisition Agreement when made (or
as of any date deemed made) (the "ACQUISITION AGREEMENT") are true and correct
in all material respects;
(f) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and marketable title to all personal property
owned by them, in each case free and clear of all liens, encumbrances and
defects except as (i) described in the Prospectus (ii) as permitted under the
Senior Credit Facility or (iii) where the failure to have such title would not
reasonably be expected to have a material adverse effect on the financial
condition or results of operations of the Company and its direct and indirect
subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"), and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases, except as would not
have a Material
4
<PAGE>
Adverse Effect after giving effect to the Apollo Acquisition ("APOLLO")(the
"PENDING ACQUISITION");
(g) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus, is duly registered and qualified to
conduct its business and is in good standing, in each jurisdiction or place
where the nature of its business requires such registration or qualification,
except where the failure to be so qualified would reasonably be expected to have
a Material Adverse Effect;
(h) Each Significant Subsidiary (as defined in Regulation S-X of the
Securities Act) is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus is duly registered and qualified to conduct its
business and is in good standing, in each jurisdiction or place where the nature
of its business requires such registration or qualification, except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect;
(i) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non assessable,
free of any pre-emptive or similar rights and conform to the description of the
capital stock contained in the Prospectus; and all of the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non assessable and, except as set
forth in the Prospectus, free of any preemptive or similar rights, and, except
as set forth in the Prospectus or the Registration Statement are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims and have been issued in compliance with all applicable
federal and state securities laws;
(j) The unissued shares of stock to be issued and sold by the Company
to the International Managers hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully paid and non assessable, free of any
preemptive or similar rights and will conform to the description of the Stock
contained in the Prospectus;
(k) The Company or its subsidiaries, as applicable, have full corporate
power and authority to enter into the Underwriting Agreements and the
Acquisition Agreement and to carry out all the terms and provisions, as provided
herein and therein;
(l) The execution and delivery of each of the Underwriting Agreements
and the Acquisition Agreement have been duly authorized by the Company
5
<PAGE>
and the Underwriting Agreements and the Acquisition Agreement are enforceable
against the Company in accordance with their respective terms except to the
extent that: (i) the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws now or hereafter
in effect relating to creditors, rights generally or by general principles of
equity whether asserted in an action at law or in equity; and (ii) rights to
indemnity and contribution hereunder may be limited by state or federal
securities laws or the public policy underlying such laws;
(m) Except (i) as disclosed in the Prospectus and (ii) as disclosed in
the Acquisition Agreement (including all schedules and attachments), the issue
and sale of the Stock by the Company, the execution, delivery and performance of
the Underwriting Agreements by the Company, and consummation by the Company and
its subsidiaries of the transactions contemplated hereby and thereby will not
(A) require any consent, approval, authorization or other order (which has not
been obtained) of any court, regulatory body, administrative agency or other
governmental body except such as may be required under the Securities Act,
securities regulatory bodies (including self-regulatory bodies), securities
exchanges or the securities or Blue Sky laws of the various states of the United
States of America; (B) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the charter or by-laws of the Company, or
any of its subsidiaries; (C) require any consent or approval (which has not been
obtained) of the parties to, or conflict with or constitute a breach of any of
the terms or provisions of, or a default under, any agreement or other
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound; (D) violate or conflict with any laws or administrative regulations,
rulings of court, decrees applicable to the Company, any of its subsidiaries or
their respective property; or (E) result in the creation or imposition of any
lien on any asset of the Company or any of its subsidiaries, except, in the case
of (A), (C), (D) or (E) above, such as would not, either singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect or prevent
the Company from performing its obligations hereunder or under the U.S.
Underwriting Agreement;
(n) Neither the Company, nor any of its subsidiaries is in violation of
its Certificate of Incorporation, By-laws or similar organizational documents or
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound which would
reasonably be expected to have a Material Adverse Effect or prevent the Company
from performing its obligations hereunder or under the U.S. Underwriting
Agreement;
(o) The statements contained under the caption "AGREEMENTS RELATED TO
PENDING ACQUISITIONS," insofar as they purport to describe the provisions of the
documents referred to therein, are accurate, complete and fair in all material
respects;
6
<PAGE>
(p) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, or any of its
subsidiaries is a party or of which any property of the Company, or any of its
subsidiaries is subject which would individually or in the aggregate reasonably
be expected to have a Material Adverse Effect, and, to the best of the Company's
knowledge, no such proceedings have been threatened by governmental authorities
or others;
(q) Except as disclosed in the Prospectus, there are no outstanding (A)
securities or obligations of the Company or any of its subsidiaries convertible
into or exchangeable for any capital stock of the Company, (B) warrants, rights
or options to subscribe for or purchase from the Company or any of its
subsidiaries any such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company or any of its
subsidiaries to issue any shares of capital stock of the Company, any
convertible or exchangeable securities or obligations, or any warrants, rights
or options;
(r) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities owned by such person or to
require the Company to include such securities in any registration statement
filed by the Company under the Securities Act;
(s) The Company is not and, after giving effect to the offering and
sale of the Stock, will not be (i) an "investment company" or an entity
controlled by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"), or
(ii) a "holding company" or a "subsidiary company" or an affiliate of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended;
(t) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes;
(u) The consolidated financial statements of the Company and its
subsidiaries included in the Prospectus present fairly in all material respects
the financial position of the Company on a consolidated basis and the results of
operations and changes in financial condition as of the dates and for the
periods therein specified. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein). The
selected financial data set forth under the captions "PROSPECTUS SUMMARY - -
SUMMARY CONSOLIDATED FINANCIAL DATA," in the Prospectus fairly present in all
material respects, on the basis stated in the Prospectus, the information
included. The other financial, numerical and statistical information and data
7
<PAGE>
set forth in the Prospectus is, in all material respects, accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company, and its subsidiaries, as applicable. The unaudited
pro forma condensed combined financial statements and the related notes thereto
included in the Prospectus present fairly, as stated therein, in all material
respects the pro forma consolidated financial position and results of operations
of the Company at the respective dates and for the respective periods indicated.
The pro forma adjustments are factually supportable. All adjustments necessary
to fairly present this pro forma information have been made;
(v) Each of (i) Ernst & Young LLP, (ii) Arthur Anderson LLP, (iii)
PricewaterhouseCoopers LLP, (iv) Deloitte & Touche and (v) Smith Partnership,
who have certified certain financial statements of the Company, its subsidiaries
and/or the entities to be acquired in the Pending Acquisitions, are each
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;
(w) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions which would be required to be
disclosed therein by Item 404 of Regulation S-K of the Commission and each
business relationship or related party transaction described therein is a fair
and accurate description of the relationships and transactions so described;
(x) Except as disclosed in the Prospectus, each of the Company and its
subsidiaries is operating in material compliance with all laws, regulations,
administrative orders or rulings or court decrees applicable to it or to any of
its property (including without limitation those relating to environmental,
safety or similar matters, federal or state laws relating to the hiring,
promotion or pay of employees), except for violations which would not reasonably
be expected to have a Material Adverse Effect;
(y) Except as, singly or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, (i) the Company and its subsidiaries
have (A) such permits, licenses, franchises and authorizations of governmental
or regulatory authorities ("PERMITS") as are necessary to own, lease and operate
their properties and to conduct their businesses as presently conducted, and (B)
fulfilled and performed all of their material obligations with respect to the
Permits, and (ii) no event has occurred that would allow, or after notice or
lapse of time would allow, revocation or termination of any Permit or that would
result in any other material impairment of the rights granted to the Company or
any of its subsidiaries under any Permit, and (iii) neither the Company nor any
of its subsidiaries has knowledge that any governmental body or agency is
considering limiting, suspending or revoking any Permit;
(z) The Company and its subsidiaries own or possess adequate rights to
use all material trademarks, service marks, tradenames, trademark registrations,
service mark registrations and copyrights necessary for the conduct of their
businesses, and to the
8
<PAGE>
Company's knowledge, the conduct of their businesses will not conflict with, and
neither the Company nor any of its subsidiaries has received any notice of any
claim of conflict with, any such rights of others (except in any such case for
any conflict that would not reasonably be expected to have a Material Adverse
Effect);
(aa) Each of the Company, and its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of its subsidiaries would have any
liability; none of the Company or its subsidiaries has incurred or expects to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Section 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "pension plan" for which the
Company or any of its subsidiaries would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification, except, in each case, as would not
have a Material Adverse Effect;
(bb) There is (i) no material unfair labor practice complaint pending
against the Company, any of its subsidiaries or, to the best knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board or any state or local labor relations board, and no material grievance or
material arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company, or any of its
subsidiaries or, to the best knowledge of the Company, threatened against any of
them and (ii) no material strike, labor dispute, slowdown or stoppage pending
against the Company or any of its subsidiaries nor, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries, except, in
each case, as would not reasonably be expected to have a Material Adverse
Effect;
(cc) The Company and each of its subsidiaries has reviewed the effect
of Environmental Laws (as defined below) and the disposal of hazardous or toxic
substances, wastes, pollutants and contaminants on the business, assets,
operations and properties of the Company, each of the subsidiaries, and
identified and evaluated associated costs and liabilities (including, without
limitation, any material capital and operating expenditures required for
clean-up, closure of properties and compliance with Environmental Laws, all
permits, licenses and approvals, all related constraints on operating activities
and all potential liabilities to third parties). On the basis of such reviews,
the Company has reasonably concluded that such associated costs and liabilities
would not reasonably be expected to have a Material Adverse Effect. None of the
Company or its subsidiaries has violated any environmental, safety or similar
law or regulation applicable to it or its business or property relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants
9
<PAGE>
or contaminants ("ENVIRONMENTAL LAWS"), lacks any permit, license or other
approval required of it under applicable Environmental Laws or is violating any
term or condition of such permit, license or approval, which, in any case, would
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect;
(dd) Each of the Company, and its subsidiaries has filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof and have paid, or made adequate reserve or provision for the
payment of, all taxes shown as due thereon except in any case where such failure
would not reasonably be expected to have a Material Adverse Effect, and the
Company has no knowledge of any tax deficiency that has had (or would have) a
Material Adverse Effect;
(ee) None of the Company, its subsidiaries nor any agent thereof acting
on behalf of any of them has taken, and none of them will take, any action that
might cause this Agreement or the issuance of the Stock to violate Regulation T
(12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve;
(ff) The Company has delivered to the International Managers true and
correct, executed copies of each Acquisition Agreement that has been executed
prior to the date hereof and there have been no amendments, alterations,
modifications or waivers thereto or in the exhibits or schedules thereto other
than those as to which the International Managers shall previously have been
advised and shall not have reasonably objected after being furnished a copy
thereof;
(gg) The Company's present intention is to use the net proceeds
received by it from the sale of the Stock pursuant to this Agreement in the
manner specified in the Prospectus under the caption "USE OF PROCEEDS"; and
(hh) The Company and its subsidiaries are implementing a comprehensive
program to analyze and address the risk that the computer hardware and software
used by them may be unable to recognize and properly execute date-sensitive
functions involving certain dates prior to and any dates after December 31,
1999, and, except as disclosed in the Prospectus, reasonably believe that such
risk will be remedied on a timely basis without material expense and will not
have a material adverse effect upon the financial condition and results of
operations of the Company and its subsidiaries taken as a whole.
(ii) Since the end of its last fiscal year the Company has filed with
the Commission all documents required to have been filed by the Company pursuant
to the Securities Exchange Act of 1934, as amended. Each such document, when
filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
10
<PAGE>
(jj) Neither the Company nor, to the knowledge of the Company, any of
its officers, directors, partners, employees or affiliates has, directly or
indirectly, given or agreed to give on behalf of the Company any money, gift or
similar benefit (other than legal price or services concessions to customers) to
any customer, supplier, employee or agent of a customer or supplier, official or
employee of any governmental agency (domestic or foreign), instrumentality of
any government (domestic or foreign) or other person who was, is or is
reasonably likely to be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which would reasonably be expected to subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), which would reasonably be expected to have a
Material Adverse Effect.
Notwithstanding the foregoing, any exceptions to the representations
and warranties contained in the Acquisition Agreements shall be deemed to be
included in the applicable representation or warranty contained in this
Agreement.
2. Purchase by, and Sale and Delivery to, International Managers. Subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell to each of the International Managers, and each of the International
Managers agrees, severally and not jointly, to purchase from the Company, at a
purchase price per share of $_____, the number of shares of International Firm
Stock set forth opposite the name of such International Manager in Schedule I
hereto and (b) in the event and to the extent that the International Managers
shall exercise the election to purchase International Optional Stock as provided
below, the Company agrees to issue and sell to each of the International
Managers, and each of the International Managers agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of shares of
International Optional Stock as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of shares of International Optional Stock by a fraction,
the numerator of which is the maximum number of shares of International Optional
Stock which such International Manager is entitled to purchase as set forth
opposite the name of such International Manager in Schedule I hereto and the
denominator of which is the maximum number of International Optional Stock that
all of the International Managers are entitled to purchase hereunder.
The Company hereby grants to the International Managers the right to
purchase at their election up to _________ shares of International Optional
Stock, at the purchase price per share set forth in the paragraph above, for the
sole purpose of covering overallotments in the sale of the Firm Stock. Any such
election to purchase Optional Stock may be exercised only by written notice from
you to the Company, given within a period of 30 calendar days after the date of
this Agreement, setting forth the aggregate number of shares of International
Optional Stock to be purchased and the date on which such shares of Optional
Stock are to be delivered, as determined by you but in no event
11
<PAGE>
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company otherwise agree in writing, earlier than three or
later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the shares of
International Firm Stock, the several International Managers propose to offer
the International Firm Stock for sale upon the terms and conditions set forth in
the Prospectus.
4. Time of Delivery. (a) The International Stock to be purchased by each
International Manager hereunder, in definitive form, and in such authorized
denominations and registered in such names as Bear, Stearns and Lehman may
request upon at least forty-eight hours' prior notice to the Company shall be
delivered by or on behalf of the Company to Bear, Stearns and Lehman for the
account of such International Manager, against payment by or on behalf of such
International Manager of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to Bear, Stearns and
Lehman at least forty-eight hours in advance. The Company will cause the
certificates representing the International Stock to be made available for
checking and packaging at least twenty-four hours prior to Delivery (as defined
below) with respect thereto at the office of Bear, Stearns International
Limited, 245 Park Avenue, New York, New York 10167 and Lehman Brothers
International (Europe), 200 Vesey Street, New York, New York 10285 (each a
"DESIGNATED OFFICE"). The time and date of such delivery and payment shall be,
with respect to the International Firm Stock, 9:30 a.m., New York City time, on
August ____, 1999, or such other time and date as Bear, Stearns, Lehman and the
Company may agree upon in writing, and, with respect to the International
Optional Stock, 9:30 a.m., New York time, on the date specified by Bear, Stearns
and Lehman in the written notice given by Bear, Stearns and Lehman of the
International Managers' election to purchase such International Optional Stock,
or such other time and date as Bear, Stearns, Lehman and the Company may agree
upon in writing. Such time and date for delivery of the International Firm Stock
is herein called the "FIRST TIME OF DELIVERY," such time and date for delivery
of the International Optional Stock, if not the First Time of Delivery, is
herein called the "SECOND TIME OF DELIVERY," and each such time and date for
delivery is herein called a "TIME OF DELIVERY."
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Stock and any additional documents requested by the
International Managers pursuant to Section 7(j) hereof, will be delivered at the
offices of Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue, New York, New
York 10022 (the "CLOSING LOCATION"), and the Stock will be delivered at a
Designated Office, all at such Time of Delivery. A meeting will be held at the
Closing Location at 5:00 p.m., New York City time, on the New York Business Day
next preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be
12
<PAGE>
available for review by the parties hereto. For the purposes of this Section 4,
"NEW YORK BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. Covenants and Agreements of the Company. The Company covenants and
agrees with the several International Managers:
(a) To prepare the Prospectus in a form approved, subject to the
requirements of applicable law and regulation, by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus which shall be reasonably
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Stock for offering and sale under the
securities laws of such U.S. jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Stock, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 12:00 noon., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the International Managers with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Stock and if at such time any
13
<PAGE>
event shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus in order to comply with
the Act, to notify you and upon your request to prepare and furnish without
charge to each International Managers and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any International Managers is required to
deliver a prospectus in connection with sales of any of the Stock at any time
nine months or more after the time of issue of the Prospectus, upon your request
but at the expense of such International Managers, to prepare and deliver to
such International Managers as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) During the period beginning on the date hereof and continuing to
and including the date 90 days after the date of the Prospectus, not to (A)
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any shares of Stock or any securities of the Company that are
substantially similar to the Stock, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other than (i) as
described in the Prospectus, (ii) as may be issued in connection with the
acquisitions of Apollo, (iii) as may be issued in connection with the
acquisitions other than Apollo provided that the persons to whom such securities
are issued agree not to publicly resell such securities during such 90-day
period, and (iv) pursuant to employee and/or director stock option plans
existing on the date of this agreement, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date hereof or
granted pursuant to such existing employee or director stock option plans), or
(B) after the date hereof, waive any provision in the Apollo Acquisition
Agreement restricting the transfer of the securities to be issued thereunder, in
either case without the prior written consent of each of Bear, Stearns and
Lehman acting together, which shalt not be unreasonably withheld;
(e) To use its best efforts to list for quotation the Stock on the New
York Stock Exchange ("NYSE"); and
(f) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
14
<PAGE>
6. Payment of Expenses. The Company covenants and agrees with the several
International Managers that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Stock under the Act and
all other reasonable expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof to the International Managers and dealers; (ii) the cost of
printing or copying any Agreement among International Managers, this Agreement,
the Blue Sky Memorandum, closing documents (including any compilations thereof)
and any other documents in connection with the offering, purchase, sale and
delivery of the Stock; (iii) all expenses in connection with the qualification
of the Stock for offering and sale under state securities laws as provided in
Section 3(b) hereof, including the reasonable fees and disbursements of counsel
for the International Managers in connection with such qualification and in
connection with the Blue Sky Survey (iv) all fees and expenses in connection
with listing the Stock on the NYSE; (v) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Stock; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this Section,
and Sections 8, 9 and 13 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Stock by them, and any advertising expenses connected with
any offers they may make.
7. Conditions of International Managers' Obligations. The obligations of
the International Managers hereunder, as to the Stock to be delivered at each
Time of Delivery, shall be subject, in their discretion, to the condition that
all representations and warranties and other statements of the Company herein
are, at and as of such Time of Delivery, true and correct, the condition that
the Company shall have performed all of its obligations hereunder therefore to
be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have been filed by 10:00 P.M., Washington, D.C.
time, on the date of this Agreement; no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
15
<PAGE>
(b) Paul, Hastings, Janofsky & Walker LLP, counsel for the
Underwriters, shall have furnished to you such written opinion or opinions,
dated such Time of Delivery, with respect to such matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c) Winston & Strawn, special counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery,
substantially in the form of Exhibit A, attached hereto.
(d) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at such Time of Delivery, (i) Ernst & Young LLP,
(ii) Arthur Andersen LLP, (iii) PricewaterhouseCoopers LLP, (iv) Deloitte &
Touche and (v) Smith Partnership shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and substance
satisfactory to you;
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus there shall
not have been any material change in the capital stock or long-term debt (other
than borrowing in the ordinary course of business) of the Company or any of its
subsidiaries or any material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Stock being delivered at such
Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the NYSE; (iii) a general
moratorium on commercial banking activities declared by either Federal or New
York, State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
clauses (i), (ii), (iii) or (iv), in the judgment of the International
Representatives, makes it
16
<PAGE>
impracticable or inadvisable to proceed with the public offering or the delivery
of the Stock being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(g) The Stock to be sold at such Time of Delivery shall have been duly
listed for quotation on the NYSE;
(h) The Company has obtained and delivered to the Underwriters executed
copies of an agreement from the stockholders listed on Schedule III hereto,
substantially in the form set forth as Exhibit B;
(i) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement;
(j) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company reasonably
satisfactory to you as to the accuracy, in all material respects, of the
representations and warranties of the Company herein at and as of such Time of
Delivery, as to the performance by the Company, in all material respects, of all
of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a), (e) and (g) of this
Section and as to such other matters as you may reasonably request.
8. Indemnity. (a) The Company agrees to indemnify and hold harmless each
International Manager and each person, if any, who controls any International
Manager within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation) to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, as originally filed or any amendment
thereof, or any related Preliminary Prospectus or the Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case (i) to
the extent but only to the extent that any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written
17
<PAGE>
information furnished to the Company by or on behalf of any International
Manager expressly for use therein and (ii) with respect to any preliminary
prospectus or preliminary prospectus supplement to the extent that any such
loss, claim, damage or liability results from the fact that an International
Manager sold Stock to a person as to whom it shall be established that there was
not sent or given, at or prior to written confirmation of such sale, a copy of
the final prospectus or prospectus supplement as then amended or supplemented in
any case where such delivery is required by the Securities Act if the Company
has previously furnished copies thereof in sufficient quantity to such
International Manager and with sufficient time to effect a delivery, and the
loss, claim, damage or liability of the International Managers results from an
untrue statement or omission of a material fact contained in the preliminary
prospectus or preliminary prospectus supplement which was corrected in the
prospectus or prospectus supplement as then amended, and such correction would
have cured the defect giving rise to such loss, claim, damage or liability. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including under this Agreement.
(b) Each International Manager severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and
expenses incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or Litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
either Registration Statement, as originally filed or any amendment thereof, or
any related preliminary prospectus, preliminary prospectus supplement or
prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that any
such loss, liability, claim, damage or expense arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any International
Manager expressly for use therein; provided, however, that in no case shall any
International Manager be liable or responsible for any amount in excess of the
underwriting discount applicable to the Stock purchased by such International
Manager hereunder. This indemnity will be in addition to any Liability which any
International Manager may otherwise have, including under this Agreement.
18
<PAGE>
(c) Promptly after receipt by an indemnified party under Subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve the indemnifying party from any
liability which it may have under this Section 8, except to the extent that the
indemnifying party has been prejudiced in any material respect by such failure
or from any liability that it may have otherwise). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to have charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have been advised by counsel that there
may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this Subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
9. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 8 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the International
Managers shall contribute to the aggregate losses, claims, damages, liabilities
and expenses of the nature contemplated by such indemnification provision
(including any investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the International Managers, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, officers of the Company who signed the Registration Statement and directors
of the Company) as incurred to which the Company and one or more of the
International Managers may be
19
<PAGE>
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company and the International Managers from the offering of the
Stock or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 8 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the International Managers in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
International Managers on the other hand shall be deemed to be in the same
proportion as (x) the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and (y) the underwriting discounts and commissions received by the International
Managers, respectively, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault of the Company and the International
Managers 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
or the International Managers and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the International Managers agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the International Managers 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 above. Notwithstanding
the provisions of this Section 9, (i) in no case shall any International Manager
be liable or responsible for any amount in excess of the underwriting discount
applicable to the Stock purchased by such International Manager hereunder, and
(ii) 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. Notwithstanding
the provisions of this Section 9 and the preceding sentence, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the Stock underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such International Manager has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. For purposes
of this Section 9, each person, if any, who controls an International Manager
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such International
Manager, and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 9. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for
20
<PAGE>
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 9 or
otherwise, except to the extent the contributing party has been prejudiced in
any material respect by such failures. No party shall be Liable for contribution
with respect to any action or claim settled without its consent; provided,
however, that such consent was not unreasonably withheld.
10. Default by a International Manager. (a) If any International Manager or
International Managers shall default in its or their obligation to purchase
International Firm Stock or International Optional Stock hereunder, and if the
shares of International Firm Stock or International Optional Stock with respect
to which such default relates do not (after giving effect to arrangements, if
any, made by you pursuant to subsection (b) below) exceed in the aggregate 10%
of the total number of shares of International Firm Stock or International
Optional Stock, the shares of International Firm Stock or International Optional
Stock to which the default relates shall be purchased by the non-defaulting
International Managers in proportion to the respective proportions which the
numbers of International Firm Stock set forth opposite their respective names in
Schedule I hereto bear to the aggregate number of International Firm Stock set
forth opposite the names of the non-defaulting International Managers.
(b) In the event that such default relates to more than 10% of the
total number of shares of International Firm Stock or International Optional
Stock, as the case may be, you may in your discretion arrange for yourself or
for another party or parties including any non-defaulting International Manager
or International Managers who so agree) to purchase such International Firm
Stock or International Optional Stock, as the case may be to which such default
relates on the terms contained herein. In the event that within five calendar
days after such a default you do not arrange for the purchase of the
International Firm Stock or International Optional Stock, as the case may be, to
which such default relates as provided in this Section 10, this Agreement or, in
the case of a default with respect to the International Optional Stock, the
obligations of the International Managers to purchase and to sell the
International Optional Stock shall thereupon terminate, without liability on the
part of International Managers with respect thereto (except in each case as
provided in Section 5, 7(a) and 8 hereof), but nothing in this Agreement shall
relieve a defaulting International Manager or International Managers of its or
their liability, if any, to the Company or the other International Managers for
damages occasioned by its or their default hereunder.
(c) In the event that the International Firm Stock or International
Optional Stock to which the default relates are to be purchased by the
non-defaulting International Managers, or are to be purchased by another party
or parties as aforesaid, shall have the right to postpone the Closing Date, as
the case may be, for a period not exceeding five business days in order to
effect whatever changes may thereby be made
21
<PAGE>
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of International Managers' Counsel, may thereby be made necessary
or advisable. The term "International Manager" as used in this Agreement shall
include any party substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such International
Firm Stock and International Optional Stock.
11. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the International Managers and the
Company contained in this Agreement, including the agreements contained in
Section 5, the indemnity agreements contained in Section 8 and the contribution
agreements contained in Section 9, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any International
Manager or any controlling person thereof or by or on behalf of the Company, any
of its officers and directors, or any controlling person of the Company, and
shall survive delivery of and payment for the Stock to and by the International
Managers. The representations contained in Section 1 and the agreements
contained in Sections 6, 8, 9, 12(d) and 15 hereof shall survive the termination
of this Agreement, including termination pursuant to Section 10 or 12 hereof.
12. Effective Date of Agreement; Termination. (a) This Agreement shall
become effective upon the execution and delivery of a counterpart hereof by each
of the parties hereto.
(b) The International Managers shall have the right to terminate this
Agreement at any time prior to the applicable Time of Delivery or the
obligations of the International Managers to purchase the International Optional
Stock at any time prior to the Applicable Time of Delivery, as the case may be,
if on or prior to such date, (i) the Company shall have failed, refused or been
unable to perform in any material respect any agreement on its part to be
performed hereunder, (ii) any other condition to the obligations of the
International Managers hereunder as provided in Section 7 is not fulfilled when
and as required in any material respect, (iii) in the reasonable judgment of the
International Managers any change or development having a Material Adverse
Effect shall have occurred since the respective dates as of which information is
given in the Prospectus, other than as set forth in the Prospectus, (iv) any
downgrading shall have in the rating accorded the Company's debt securities by
any "nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Securities
Act, or any such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any
of the Company's debt securities, or (v)(A) any domestic or international event
or act or occurrence has materially disrupted, or in the opinion of the
International Managers will in the immediate future materially disrupt, the
market for the Company's securities or for securities in general; or (B) trading
in securities generally on the NYSE
22
<PAGE>
or quotations on the Nasdaq shall have been suspended or materially limited, or
minimum or maximum prices for trading shall have been established, or maximum
ranges for prices for securities shall have been required, on such exchange, or
by such exchange or other regulatory body or governmental authority having
jurisdiction; or (C) a banking moratorium shall have been declared by federal or
state authorities, or a moratorium in foreign exchange trading by major
international banks or persons shall have been declared; or (D) there is an
outbreak or escalation of armed hostilities involving the United States on or
after the date hereof, or if there has been a declaration by the United States
of a national emergency or war, the effect of which shall be, in the
International Managers' judgment, to make it inadvisable or impracticable to
proceed with the offering, sale and delivery of the International Firm Stock or
the International Optional Stock, as the case may be, on the terms and in the
manner contemplated by the Prospectus; or (E) there shall have been such a
material adverse change in general economic, political or financial conditions
or if the effect of international conditions on the financial markets in the
jurisdictions in which the International Firm Stock or International Optional
Stock may be offered or sold such as, in the International Managers' judgment,
makes it inadvisable or impracticable to proceed with the offering, sale and
delivery of the International Firm Stock or the International Optional Stock, as
the case may be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 12 shall be by
telephone, telex, telegraph or telephonic facsimile, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 10(b) or 12(b) hereof), or if
the sale of the Stock provided for herein is not consummated because any
condition to the obligations of the International Managers set forth herein is
not satisfied (other than the condition set forth in Section 7(b)) or because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by the International Managers, reimburse the International Managers
for all out-of-pocket expenses (including the fees and expenses of their
counsel), incurred by the International Managers in connection herewith.
(ii) If this Agreement shall be terminated pursuant to Section 10
hereof, the Company shall not then be under any liability to any International
Manager except as provided in Sections 6 and 8 hereof.
13. Notices. In all dealings hereunder, you shall act on behalf of each of
the International Managers, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
International Manager made or given by you jointly or by Bear, Stearns
International Limited and Lehman Brothers International (Europe) on behalf of
you as the representatives. All statements, requests,
23
<PAGE>
notices and agreements hereunder shall be in writing, and if to the
International Managers shall be delivered or sent by mail, telex or facsimile
transmission to you as the representatives in care of Bear, Stearns
International Limited, One Canada Square, London E14 5AD, United Kingdom,
Attention: Registration Department and Lehman Brothers International (Europe),
One Broadgate, London EC2M 7HA, United Kingdom, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to a International Manager
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such International Manager at its address set forth in
its International Managers' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
14. Parties. This Agreement shall be binding upon, and inure solely to the
benefit of, the International Managers, the Company and, to the extent provided
in Sections 8 and 9 hereof, the officers and directors of the Company and each
person who controls the Company or any International Manager, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the U.S. Stock from any International Manager
shall be deemed a successor or assign by reason merely of such purchase.
15. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
16. Applicable Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflict of laws. The Company hereby irrevocably agrees that any
legal action, suit, or proceedings against it with respect to any of its
obligations, liabilities or any other matter under or arising out of or in
connection with this Agreement or for recognition or enforcement of any judgment
rendered in any such action, suit or proceedings may be brought in any state or
federal court in New York and, by execution and delivery of this Agreement, the
Company hereby irrevocably accepts and submits to the non-exclusive jurisdiction
of each of the aforesaid courts in personam generally and unconditionally with
respect to any such action, suit, or proceeding for itself and in respect of any
of their property. The Company further agrees that final judgment against it in
any action, suit or proceeding referred to herein shall be conclusive and may be
enforced in any other jurisdiction, within or outside the United States, by suit
on the judgment, a certified or exemplified copy of each shall be conclusive
evidence of the fact and of the amount of its obligations and liabilities.
24
<PAGE>
In addition, the Company hereby irrevocably and unconditionally waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions, suits or proceedings arising out of or in connection with
this Agreement brought in any of the aforesaid courts, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
The Company hereby appoints _______________ as its authorized agent and hereby
appoints ___________ as its authorized agent (in each case, an "AUTHORIZED
AGENT") upon which process may be served in any action based on this Agreement
that may be instituted in any state or federal court in New York by any
Underwriter or by any person controlling any Underwriter. The Company represents
to each Underwriter that it has notified _______ and _________ respectively, of
such appointments and that _________ and _________ respectively, have accepted
the same in writing. Such appointments shall be irrevocable for a period of five
years from and after the First Closing Date unless and until a successor
Authorized Agent shall be appointed and such successor shall accept such
appointment for the remainder of such five-year period. The Company will notify
each Underwriter in writing of the appointment. The Company will take any and
all action, including the filing of any and all documents and instruments, that
may be necessary to continue such appointment or appointments in full force and
effect as aforesaid. Service of process upon the applicable Authorized Agent (or
its successor) and written notice of such service to the Company by mail to the
address for the Company specified pursuant to Section 14, shall be deemed in
every respect effective service of process upon the Company. In addition to any
other method of service of process upon applicable law, service of process by
notice sent registered mail return receipt requested or delivered, by courier or
otherwise, to the address for the Company specified pursuant to Section 14,
shall be deemed in every respect effective service of process upon the Company.
17. Counterparts. This Agreement may be signed in two (2) or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
SFX ENTERTAINMENT, INC.
By:_______________________________
Name:
Title:
25
<PAGE>
Accepted as of the date first above written.
BEAR, STEARNS INTERNATIONAL LIMITED
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SOCIETE GENERALE SA
BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LTD
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
As Representatives of the several International
Managers
BEAR, STEARNS INTERNATIONAL LIMITED
By:_____________________________________
Name:
Title:
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
By:_____________________________________
Name:
Title:
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
By:_____________________________________
Name:
Title:
SOCIETE GENERALE SA
By:_____________________________________
Name:
Title:
BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LTD
By:_____________________________________
26
<PAGE>
Name:
Title:
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
By:_____________________________________
Name:
Title:
27
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
TOTAL NUMBER OF INTERNATIONAL
SHARES OF OPTIONAL
INTERNATIONAL STOCK TO BE
FIRM PURCHASED
STOCK TO BE IF MAXIMUM
INTERNATIONAL MANAGER PURCHASED OPTION EXERCISED
- ---------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Bear, Stearns International Limited....................
Lehman Brothers International (Europe).................
Morgan Stanley & Co. International Limited.............
Societe Generale.......................................
BancBoston Robertson Stephens International Ltd
Prudential-Bache Securities (U.K.) Inc.................
----------------- -----------------
TOTAL.............................................
================= =================
</TABLE>
28
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
TOTAL NUMBER OF U.S. OPTIONAL
SHARES OF STOCK TO BE
U.S. FIRM PURCHASED
STOCK TO BE IF MAXIMUM OPTION
U.S. UNDERWRITER PURCHASED EXERCISED
- -------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Bear, Stearns & Co. Inc..........................
Lehman Brothers Inc..............................
SG Cowen Securities Corporation..................
Morgan Stanley & Co. Incorporated................
BancBoston Robertson Stephens Inc................
Prudential Securities Incorporated...............
----------------- -----------------
TOTAL.......................................
================= =================
</TABLE>
29
<PAGE>
SCHEDULE III
List of required Lock-Up Letters
1. Robert F.X. Sillerman
2. Michael G. Ferrel
3. Brian E. Becker
4. David Falk
5. Howard J. Tytel
6. Thomas P. Benson
7. Richard A. Liese
8. D. Geoffrey Armstrong
9. James F. O'Grady, Jr.
10. Paul Kramer
11. Edward F. Dugan
12. John D. Miller
13. John J. Boyle
[May be revised]
30
<PAGE>
EXHIBIT A
August __, 1999
Bear, Stearns & Co. Inc.
Lehman Brothers Inc.,
As Representatives
for each of the several
U.S. Underwriters
Bear, Stearns International Limited
Lehman Brothers International (Europe)
As Representatives
for each of the several
International Managers
Ladies and Gentlemen:
We have acted as special counsel to SFX Entertainment, Inc., a Delaware
corporation (the "COMPANY"), in connection with the offer and sale of 7,500,000
shares (the "SHARES") of the Company's Class A Common Stock, par value $.01 per
share (the "COMMON STOCK"). Of the 7,500,000 shares of Common Stock being issued
and sold, (i) [_________] shares are being sold pursuant to the Underwriting
Agreement dated August __, 1999 (the "U.S. UNDERWRITING AGREEMENT"), among the
Company and the several Underwriters named in Schedule I hereto (the "U.S.
UNDERWRITERS") and (ii) _____ shares are being sold pursuant to the Underwriting
Agreement dated August __, 1999 (the "INTERNATIONAL UNDERWRITING AGREEMENT" and,
together with the U.S. Underwriting Agreement, the "UNDERWRITING AGREEMENTS"),
among the Company and the several International Managers named in Schedule II
hereto (the "INTERNATIONAL MANAGERS").
This opinion letter is being furnished to you pursuant to Section ____
of each of the Underwriting Agreements. Capitalized terms used but not defined
herein shall have the meanings set forth in the Underwriting Agreements.
In connection with this opinion letter, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement on Form S-3 (File No. 333-84371)
relating to the offering of the Shares, as filed with the Securities and
Exchange Commission (the "COMMISSION") on August __, 1999 under the Securities
Act of 1933, (as so amended, the "REGISTRATION
<PAGE>
STATEMENT"); (ii) the final prospectus dated August __, 1999 relating to the
Shares offered and sold in the United States and Canada in the form filed with
the Commission on August __, 1999 (such final prospectus, including documents
incorporated by reference therein, being hereinafter referred to as the "U.S.
PROSPECTUS"); (iii) the final prospectus dated August __, 1999 relating to the
Shares offered and sold outside of the United States and Canada in the form
filed with the Commission on August __, 1999 (such final prospectus, including
documents incorporated by reference therein, being hereinafter referred to as
the "INTERNATIONAL PROSPECTUS" and, together with the U.S. Prospectus, the
"PROSPECTUSES"); (iv) the certificate of incorporation or certificate of
formation and limited liability company agreement, in each case as applicable,
of the Company and each of the subsidiaries of the Company listed on Schedule
III hereto (the "LISTED SUBSIDIARIES"), each as currently in effect; (v) the
By-Laws of the Company and each of the Listed Subsidiaries, each as currently in
effect; (vi) certain resolutions adopted by the Board of Directors of the
Company and a Special Committee thereof relating to, among other things, the
issuance and the sale of the Shares; and (vii) execution copies of the
Underwriting Agreements. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company and
such certificates of public officials, certificates of officers or
representatives of the Company and others, and such other agreements, documents,
instruments, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof. As to any
facts material to the opinions expressed herein which we did not independently
establish or verify, we have relied upon oral and written statements and
representations of officers and other representatives of the Company and others.
Members of our firm are admitted to the bar in the State of New York,
and we do not express any opinion as to the laws of any other jurisdiction other
than the General Corporation Law of the State of Delaware and the Delaware
Limited Liability Company Act and the federal laws of the United States of
America to the extent referred to specifically herein.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses. The Company is duly qualified to do
business and is in
2
<PAGE>
good standing as a foreign corporation in each jurisdiction in which the nature
of its business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or the condition (financial or otherwise) of the Company and its
direct and indirect subsidiaries, taken as a whole (a "MATERIAL ADVERSE
EFFECT").
2. Each Listed Subsidiary is validly existing and in good standing in
the jurisdiction of its organization indicated on Schedule III hereto, with full
corporate or limited liability company power, as applicable, and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectuses, except where the failure to be in good standing would not
have a Material Adverse Effect.
3. The Company has the authorized capitalization set forth in the
Prospectuses, and the Shares to be issued and sold by the Company to the U.S.
Underwriters and the International Managers pursuant to the Underwriting
Agreements have been duly and validly authorized and, when duly countersigned by
the Company's transfer agent and registrar and issued and delivered in
accordance with the provisions of the Underwriting Agreements, will be duly and
validly issued and fully paid and non-assessable. The Shares conform to the
description of the Common Stock in the Prospectuses.
4. The Underwriting Agreements have been duly authorized, executed, and
delivered by the Company, are legally valid and binding obligations of the
Company, and are enforceable against the Company in accordance with their terms,
except that (a) the enforceability thereof may be subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws, now or hereafter in effect, relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity) and (b) Federal and state
securities laws or the public policy underlying such laws may limit the right to
indemnity and contribution thereunder. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or filing
with, any Federal, state, local or other governmental authority or any court or
other tribunal is required by the Company for the execution, delivery, or
performance of the Underwriting Agreements by the Company (except filings under
the Act and with the New York Stock Exchange which have been made and consents,
authorizations, permits, orders and other matters required by the National
Association of Securities Dealers, Inc. or under "blue sky" or state securities
laws, as to which we express no opinion).
5. Except as disclosed in the Prospectuses, the execution, delivery and
performance of the Underwriting Agreements by the Company and the issuance and
sale of the Shares thereunder, will not (A) conflict with or constitute a breach
of any of
3
<PAGE>
the terms or provisions of, or a default under, the certificate of incorporation
or by-laws of the Company or of the certificate of incorporation or certificate
of formation and limited liability company agreement, as applicable, or by-laws
of any of the Listed Subsidiaries; (B) to our knowledge, require any consent or
approval (which has not been obtained) of the parties to, or conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
any agreement or other instrument of the Company filed as an exhibit to the
Registration Statement pursuant to Item 601(b)(10) of Regulation S-K under the
Act; (C) to our knowledge, violate or conflict with any law of the United States
of America or the State of New York applicable to the Company, any of the Listed
Subsidiaries or their respective property (provided that we express no opinion
on the rules or regulations of the National Association of Securities Dealers,
Inc. or the "blue sky" or state securities laws of any state or foreign
jurisdiction), except, in the case of clauses (B) and (C) above, such as would
not, either singly or in the aggregate, have a Material Adverse Effect or
prevent the Company from performing its obligations pursuant to the Underwriting
Agreements.
6. The statements contained in the Prospectuses under the caption
"Description of Capital Stock", insofar as they purport to describe the
provisions of the documents referred to therein, are accurate, complete and fair
in all material respects.
7. To our knowledge, other than as set forth in the Prospectuses, there
are no legal or governmental proceedings pending to which the Company or any of
the Listed Subsidiaries is a party or to which any property of the Company or
any of the Listed Subsidiaries is subject which would reasonably be expected
to have a Material Adverse Effect.
8. The Company is not and, after giving effect to the offering and sale
of the Shares, will not be (i) an "investment company" or an entity "controlled"
by an "investment company", as such terms are defined in the Investment Company
Act of 1940, as amended or (ii) a "holding company" or a "subsidiary company" or
an "affiliate" of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
9. To our knowledge, the Registration Statement has been declared
effective by the Commission and no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission. The Registration Statement,
as of its effective date, and the Prospectuses, as of their respective dates
(other than the financial statements, schedules and other financial and
accounting information included in or excluded from the Registration Statement
or the Prospectuses, as to which we express no opinion), comply as to form in
all material respects with the requirements of the Act and the rules and
regulations of the Commission thereunder. The documents specifically
incorporated by reference in the Prospectuses prior to the date hereof (other
than the financial statements, schedules and other
4
<PAGE>
financial and accounting information included therein or excluded therefrom, as
to which we express no opinion) at the time they were filed with the Commission,
complied as to form in all material respects with the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
In addition, we have participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the U.S. Underwriters and the
International Managers and their counsel at which the contents of the
Registration Statement, the Prospectuses and related matters were discussed and,
although we are not passing upon and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses and have made no independent check or
verification thereof except for those made under the caption "Description of
Capital Stock" in the Prospectuses (to the extent referred to in paragraph 6
hereof), on the basis of the foregoing, no facts have come to our attention that
have led us to believe that (i) the Registration Statement, at the time it
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (other than the information omitted therefrom
in reliance on Rule 430A under the Act) or (ii) either of the Prospectuses, as
of their respective dates and as of the date hereof, contained an untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that we express no opinion or belief as
to the financial statements, schedules and other financial, accounting and
statistical information included in or excluded from the Registration Statement
or the Prospectuses.
The foregoing opinions are subject to the following assumptions,
qualifications and limitations:
(A) We have relied, as to matters of fact, to the extent we deemed
proper, on certificates of responsible officers of the Company and the Listed
Subsidiaries and public officials.
(B) Any statement or opinion set forth herein that is qualified by the
phrase "to our knowledge" or any similar phrase, is intended to indicate that,
during the course of our limited representation of the Company in the subject
transaction, no information that would give actual knowledge of the inaccuracy
of such statement or opinion has come to the attention of any lawyer who has
devoted substantive attention to the subject transaction and who is still
currently employed by or a partner of Winston & Strawn. We have not undertaken
any independent investigation to determine the accuracy of any such statement or
opinion and no inference as to our knowledge of any matters bearing on the
accuracy of any such statement or opinion should be drawn from the fact of our
representation of the Company.
5
<PAGE>
(C) In rendering opinions involving a concept of materiality, we have
relied exclusively in such determination on officers of the Company.
(D) We express no opinion as to compliance of the Registration
Statement, the Prospectuses or the documents incorporated by reference into the
Prospectuses with Rule 421 of the Act.
This opinion letter is as of the date hereof and we undertake no, and
disclaim any, obligation to advise you of any changes in any matter set forth
herein. This opinion letter is furnished to you solely for your benefit in
connection with the closing under the Underwriting Agreements occurring today
and is not to be used, circulated, quoted or otherwise referred to for any other
purpose without our express prior written consent.
6
<PAGE>
EXHIBIT B
LOCK UP LETTER AGREEMENT
August _____, 1999
SFX ENTERTAINMENT, INC.
650 Madison Avenue
16th Floor
New York, New York 10022
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
SG COWEN SECURITIES CORPORATION
BANCBOSTON ROBERTSON STEPHENS INC.
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the
several Underwriters
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
and
c/o Lehman Brothers Inc.
200 Vesey Street
New York, New York 10285
BEAR, STEARNS INTERNATIONAL LIMITED
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
SOCIETE GENERALE SA
BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LTD
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
As Representatives of the
several International Managers
c/o Bear, Stearns International Limited
245 Park Avenue
New York, New York 10167
and
c/o Lehman Brothers International (Europe)
200 Vesey Street
New York, New York 10285
<PAGE>
Ladies and Gentlemen:
The undersigned understands that Bear, Stearns & Co. Inc., Lehman
Brothers Inc., Morgan Stanley & Co. Incorporated, SG Cowen Securities
Corporation, BancBoston Robertson Stephens Inc., and Prudential Securities
Incorporated, as the U.S. representatives of the several U.S. underwriters, and
Bear, Stearns International Limited, Lehman Brothers International (Europe),
Morgan Stanley & Co. International Limited, Societe Generale SA, BancBoston
Robertson Stephens International Ltd, and Prudential-Bache Securities (U.K.)
Inc., as the lead managers (together with the U.S. representatives, the
"REPRESENTATIVES") of the several International Managers (together with the U.S.
underwriters, the "UNDERWRITERS"), propose to enter into a U.S. underwriting
agreement (the "U.S. UNDERWRITING AGREEMENT") and an international underwriting
agreement (the "INTERNATIONAL UNDERWRITING AGREEMENT"), respectively, with SFX
Entertainment, Inc. (the "COMPANY") providing for the public offering by the
Underwriters, including the Representatives, of Class A Common Stock, par value
$.01 per share (the "CLASS A COMMON STOCK"), of the Company (the "PUBLIC
OFFERING"). Capitalized terms not defined herein shall have the meaning given
them in the U.S. Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and
undertake the Public Offering of the Company's Class A Common Stock and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the undersigned agrees that, without the prior written consent of Bear, Stearns
& Co., Inc. and Lehman Brothers Inc., he, she or it will not, without the prior
written consent of Bear, Stearns & Co. Inc. and Lehman Brothers Inc., during the
period commencing on the date hereof and ending 60 days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option to contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of the Class A Common Stock, the Company's Class B Common
Stock, par value $.01 per share (the "CLASS B COMMON STOCK" and, together with
the holders of the Class A Common Stock, the "COMMON STOCK"), or any securities
convertible into or exercisable or exchangeable for Common Stock or any right to
acquire Common Stock, or (ii) enter into any swap or similar agreement that
transfers, in whole or in part, the economic risk of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing provisions shall not apply to (i) exercise of options
or warrants, (ii) transfers, without consideration, of the Common Stock or any
securities convertible into, or exercisable or exchangeable for Common Stock to
family members or to one or more trusts established for the benefit of the
undersigned or one or more family members, provided that the transferee executes
and delivers to Bear, Stearns & Co. Inc. and Lehman Brothers Inc., an agreement
whereby the transferee agrees to be bound by all of the foregoing terms and
provisions, (iii) the conversion of Class B Common Stock into Class A Common
Stock, or (iv) the pledge of Common Stock to secure obligations of the
undersigned or his family members or any trust established for the undersigned
or one or more family members, provided that the pledgee is notified of the
restrictions contained herein.
In addition, the undersigned agrees that the Company may, and that the
undersigned will, (i) with respect to any shares of Common Stock for which the
undersigned is
<PAGE>
the record holder, cause the transfer agent for the Company to note
stop-transfer instructions with respect to such shares of Common Stock
consistent with the foregoing paragraph on the transfer books and records of the
Company and (ii) with respect to any shares of Common Stock for which the
undersigned is the beneficial holder but not the record holder, cause the record
holder of such shares of Common Stock to cause the transfer agent for Company to
note stop-transfer instructions with respect to such shares of Common Stock
consistent with the foregoing paragraph on the transfer books and records of the
Company.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this letter agreement,
and that, upon request, the undersigned will execute any additional documents
necessary or desirable in connection with the enforcement hereof. All authority
herein conferred or agreed to be conferred shall survive the death or incapacity
of the undersigned and any obligations of the undersigned shall be binding upon
the heirs, personal representatives, successors, and assigns of the undersigned.
Very truly yours,
___________________________________
___________________________________
(Name - Please Type)
___________________________________
___________________________________
___________________________________
(Address)
___________________________________
(Social Security or Taxpayer I.D. No.)
<PAGE>
[Winston & Strawn Letterhead]
August 16, 1999
SFX Entertainment, Inc.
650 Madison Avenue
16th Floor
New York, New York 10022
Re: Registration Statement on Form S-3 of SFX Entertainment, Inc.
Ladies and Gentlemen:
We have acted as special counsel to SFX Entertainment, Inc., a
Delaware corporation (the "Company"), in connection with the registration on
Form S-3 of the offer and sale (the "Offering") of 7,500,000 shares (the "Firm
Shares") of Class A common stock of the Company, par value of $.01 per share
(the "Class A Common Stock"), and up to an additional 1,125,000 shares of Class
A Common Stock (the "Option Shares" and, together with the Firm Shares, the
"Shares") that the underwriters named in the Registration Statement (as defined
below) have an option to purchase from the Company solely to cover
over-allotments.
This opinion letter is delivered in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").
In connection with this opinion letter, we have examined and
are familiar with originals or copies, certified or otherwise identified to our
satisfaction, of, as currently in effect (i) the Registration Statement (No.
333-84371) relating to the Shares as filed with the Securities and Exchange
Commission (the "Commission") on August 3, 1999 under the Act, as amended by
Amendment No. 1 thereto filed with the Commission on August 10, 1999 and
Amendment No. 2 thereto filed with the Commission on August 16, 1999 (as so
amended, the "Registration Statement"), (ii) the United States preliminary
prospectus dated August 10, 1999 relating to the Offering, (iii) the
International preliminary prospectus dated August 10, 1999 relating to the
Offering, (iv) the Amended and Restated Certificate of Incorporation of the
Company, (v) the By-laws of the Company, (vi) the form of the U.S. Underwriting
Agreement to be entered into by the Company, Bear, Stearns & Co. Inc., Lehman
Brothers Inc., Morgan Stanley & Co. Incorporated, SG Cowen Securities
Corporation, BancBoston Robertson Stephens Inc. and Prudential Securities
Incorporated (the "U.S. Underwriting Agreement"), (vii) the form of the
International Underwriting Agreement to be entered into by the Company, Bear
Stearns International Limited, Lehman Brothers International (Europe), Morgan
Stanley & Co.
<PAGE>
International Limited, Societe Generale, BancBoston Robertson Stephens
International Ltd. and Prudential-Bache Securities (U.K.) Inc. (the
"International Underwriting Agreement" and, together with the U.S. Underwriting
Agreement, the "Underwriting Agreements") and (viii) resolutions of the Board of
Directors of the Company relating to, among other things, the issuance and sale
of the Shares and the filing of the Registration Statement (the "Board
Resolutions"). We have also examined such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. As to any facts material
to this opinion which we did not independently establish or verify, we have
relied upon oral or written statements and representations of officers and other
representatives of the Company and others.
Based upon and subject to the foregoing, we are of the opinion
that the Shares, when sold in accordance with the provisions of the Underwriting
Agreements following approval thereof by the Special Committee of the Board of
Directors of the Company referred to in the Board Resolutions, shall be legally
issued, fully paid and non-assessable.
We hereby consent to the reference to our firm under the
heading "Legal Matters" in the prospectuses included in the Registration
Statement and to the filing of this opinion letter with the Commission as an
exhibit to the Registration Statement. In giving such consent, we do not concede
that we are experts within the meaning of the Act or the rules and regulations
thereunder or that this consent is required by Section 7 of the Act.
Very truly yours,
/s/ Winston & Strawn
-2-
<PAGE>
================================================================================
ASSET PURCHASE AGREEMENT
by and among
LIVENT INC.,
LIVENT (U.S.) INC.,
LIVENT REALTY (NEW YORK) INC.,
LIVENT REALTY (CHICAGO) INC.,
LIVENT INTERNATIONAL INC.
and
SFX ENTERTAINMENT, INC.
-----------------------------
Dated as of May 28, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS...................................................... 2
Section 1.1. Definitions........................................ 2
ARTICLE II. PURCHASE AND SALE............................................... 21
Section 2.1. Purchase and Sale of Purchased Assets.............. 21
Section 2.2. Purchase Price..................................... 22
Section 2.3. Closing Purchase Price Adjustments................. 23
Section 2.4. Post-Closing Purchase Price Adjustments............ 24
Section 2.5. Assumption of Liabilities.......................... 26
Section 2.6. Deposit............................................ 27
Section 2.7. Payment of Purchase Price.......................... 27
Section 2.8. Allocation of Purchase Price....................... 29
Section 2.9. Warrants........................................... 29
ARTICLE III. CLOSING ....................................................... 30
Section 3.1. Closing............................................ 30
Section 3.2. Closing Deliveries of the Sellers.................. 30
Section 3.3. Closing Deliveries of the Buyer.................... 31
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLERS................... 32
Section 4.1. Corporate Organization............................. 32
Section 4.2. Qualification to Do Business....................... 32
Section 4.3. Authorization and Validity of Agreement............ 32
Section 4.4. No Conflict or Violation........................... 32
Section 4.5. Consents........................................... 33
Section 4.6. Compliance with Law................................ 33
Section 4.7. Financial Statements............................... 33
Section 4.8. Litigation......................................... 34
Section 4.9. Labor Relations.................................... 34
Section 4.10. Employee Benefits.................................. 34
Section 4.11. Purchased Real Property............................ 34
Section 4.12. Title, Ownership and Related Matters............... 37
Section 4.13. Intellectual Property.............................. 37
Section 4.14. Contracts.......................................... 37
Section 4.15. Tax Matters........................................ 38
Section 4.16. Environmental Matters.............................. 38
Section 4.17. No Material Adverse Effect; Conduct of Business ... 40
Section 4.18. Investment Undertaking............................. 41
Section 4.19. Excise Tax Act Registration........................ 41
Section 4.20. Brokers............................................ 41
Section 4.21. Quebec Sales Tax................................... 42
Section 4.22. Not a Non-Resident................................. 42
(i)
<PAGE>
Section 4.23. Competition Act.................................... 42
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE BUYER...................... 42
Section 5.1. Corporate Organization............................. 42
Section 5.2. Qualification to Do Business....................... 42
Section 5.3. Authorization and Validity of Agreement............ 42
Section 5.4. No Conflict or Violation........................... 42
Section 5.5. Consents and Approvals............................. 43
Section 5.6. Authorization and Validity of Warrants
and Common Stock ................................ 43
Section 5.7. Buyer SEC Documents and Financial Statements ...... 43
Section 5.8. No Material Adverse Effect; Conduct of Business ... 44
Section 5.9. Availability of Funds.............................. 44
Section 5.10. Adequate Assurances Regarding Executory Contracts . 44
Section 5.11. Brokers............................................ 44
Section 5.12. Excise Tax Act Registration........................ 44
Section 5.13. Investigation by Buyer............................. 44
ARTICLE VI. FURTHER AGREEMENTS BETWEEN THE PARTIES.......................... 45
Section 6.1. Conduct of Business Before the Closing Date ....... 45
Section 6.2. Consents; HSR Act.................................. 47
Section 6.3. Access to Properties and Records; Confidentiality . 48
Section 6.4. Further Assurances................................. 48
Section 6.5. Reasonable Efforts................................. 48
Section 6.6. Alternative Transaction............................ 49
Section 6.7. Livent Headquarters License Agreement.............. 49
Section 6.8. Procurement of Orders; Adequate Assurances
Regarding Assumed Contracts ..................... 50
Section 6.9. Pantages Naming Agreement.......................... 51
Section 6.10. Application for "No Action" Letter................. 51
ARTICLE VII. EMPLOYEES AND EMPLOYEE PLANS................................... 51
Section 7.1. Offer of Employment................................ 51
Section 7.2. Liabilities........................................ 52
Section 7.3. Employee Health and Welfare........................ 53
ARTICLE VIII. TAXES ....................................................... 54
Section 8.1. Taxes Related to Purchase of Assets................ 54
Section 8.2. Cooperation on Tax Matters......................... 54
Section 8.3. Election Re: Accounts Receivable................... 55
Section 8.4. Subsection 20(24) Election......................... 55
ARTICLE IX. REAL PROPERTY MATTERS........................................... 55
Section 9.1. Title Exceptions................................... 55
Section 9.2. Violations......................................... 57
Section 9.3. Casualty and Condemnation.......................... 58
Section 9.4. Condition of the Properties........................ 59
-ii-
<PAGE>
Section 9.5. Satisfaction and Discharge; Survival............... 59
Section 9.6. Permanent Certificate of Occupancy for New
York Theater and Certificate of Completion
for Chicago Theater ............................. 59
Section 9.7. Arbitration........................................ 60
Section 9.8. Structural Support for Pantages Theater............ 61
ARTICLE X. SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................... 62
Section 10.1. Survival of Representations and Warranties ........ 62
ARTICLE XI. INDEMNIFICATION................................................. 62
Section 11.1. Escrow A Fund and the Put Obligation............... 62
Section 11.2. Indemnification by the Sellers..................... 62
Section 11.3. Indemnification by the Buyer....................... 63
Section 11.4. Indemnification Procedures - Third-Party Claims ... 64
Section 11.5. Indemnification Procedures -- Other Claims ........ 66
Section 11.6. Right to Indemnification Not Affected by
Knowledge or Waivers ............................ 66
ARTICLE XII. CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLERS ............ 66
Section 12.1. Representations and Warranties of the Buyer ....... 66
Section 12.2. Performance of the Obligations of the Buyer ....... 66
Section 12.3. Consents; HSR Act.................................. 67
Section 12.4. Litigation......................................... 67
Section 12.5. No Violation of Orders............................. 67
Section 12.6. Entry of the Orders................................ 67
Section 12.7. Assignment of Bankruptcy Claim..................... 67
Section 12.8. Dundee Agreement................................... 67
Section 12.9. Delivery of the Buyer's Closing Documents.......... 68
ARTICLE XIII. CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER ........ 68
Section 13.1. Representations and Warranties of the Sellers ..... 68
Section 13.2. Performance of the Obligations of the Sellers ..... 68
Section 13.3. Consents; HSR Act.................................. 68
Section 13.4. Litigation......................................... 69
Section 13.5. Cure of Defaults................................... 69
Section 13.6. No Violation of Orders............................. 69
Section 13.7. Entry of the Orders................................ 69
Section 13.8. Buyer's Title Company.............................. 69
Section 13.9. Planning Act....................................... 69
Section 13.10. Dundee Agreement................................... 69
Section 13.11. Operating Condition................................ 70
Section 13.12. Delivery of the Sellers' Closing Documents ........ 70
ARTICLE XIV. TERMINATION.................................................... 70
Section 14.1. Conditions of Termination.......................... 70
Section 14.2. Effect of Termination; Remedies.................... 71
-iii-
<PAGE>
ARTICLE XV. MISCELLANEOUS................................................... 72
Section 15.1. Disclaimer of Additional Representations
and Warranties; Schedules ....................... 72
Section 15.2. Successors and Assigns............................. 72
Section 15.3. Governing Law; Jurisdiction........................ 72
Section 15.4. Expenses........................................... 73
Section 15.5. Currency Exchange.................................. 73
Section 15.6. Severability....................................... 73
Section 15.7. Notices............................................ 73
Section 15.8. Amendments; Waivers................................ 75
Section 15.9. Public Announcements............................... 75
Section 15.10. Entire Agreement................................... 75
Section 15.11. Parties in Interest................................ 75
Section 15.12. Construction....................................... 75
Section 15.13. Descriptive Headings............................... 76
Section 15.14. Recordation........................................ 76
Section 15.15. Counterparts; Facsimile Signatures................. 76
Section 15.16. Bankruptcy Orders.................................. 76
Section 15.17. Certain Deliveries By Livent....................... 76
-iv-
<PAGE>
INDEX TO SCHEDULES
1.1 Prepaid Purchased Assets
1.2 Excluded Assets
1.3A Excluded Land (Vancouver Ford Centre Theater)
1.3B Excluded Land (North York Ford Centre Theater)
1.3C Excluded Land (Livent Headquarters)
1.3D Excluded Land (Toronto, Ontario)
1.4 Excluded Contracts
1.5 Licenses and Permits
1.7 Surveys
1.8(a) Certain Permitted Liens
1.8(b) Certain Permitted Closing Liens
2.3(a) Form of Estimated Closing Date Balance Sheet
2.3(e) Pre-Production Expenditures
4.2 Foreign Qualification
4.5 Consents and Approvals
4.6 Compliance with Law
4.7 Unaudited Financial Statements
4.8 Litigation
4.10 Employee Benefit Plans
4.11(a) Purchased Real Property
4.11(a)(i) Chicago Theater Land
4.11(a)(ii) Pantages Theater Land
4.11(b) Notices of Default or Breach
4.11(c) Leases
4.11(d) Space Leases
4.11(e) Purchase Options, Rights of First Refusal and Rights of Reverter
4.11(f) Property Permits
4.11(i) Improvements
4.11(j) Violations
4.11(k) Tax Proceedings
4.11(l) Transfer of Air Rights or Development Rights
4.11(m) Security Deposits under Space Leases
4.11(o) Casualty Insurance
4.13 Intellectual Property
4.14(a)(i) Assumed Executory Contracts
4.14(a)(ii) Other Assumed Contracts
4.15 Tax Matters
4.16 Environmental Matters
4.17 Seller Material Adverse Changes and Conduct of Business
6.1 Conduct of Business
7.1(a) Assumed Collective Bargaining Agreements
9.1(a) Title Commitments
-v-
<PAGE>
EXHIBITS
Exhibit A -- Form of Order of the Canadian Bankruptcy Court
Exhibit B -- Dundee Term Sheet
Exhibit C -- Form of Put Obligation
Exhibit D -- Form of Order of the U.S. Bankruptcy Court
Exhibit E -- Form of Warrant
Exhibit F -- Form of Chicago Theater Deed
Exhibit G -- Form of Registration Rights Agreement
Exhibit H-1 -- Seller Certification of Livent N.Y.
Exhibit H-2 -- Seller Certification of Livent Chicago
Exhibit H-3 -- Seller Certification of Livent
Exhibit I -- Form of Release of Broker's Lien
Exhibit J -- Form of Break-Up Fee Order
-vi-
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of May 28, 1999, is made and
entered into by and among Livent Inc., an Ontario corporation ("Livent"); Livent
International Inc., a Barbados corporation ("Livent International"); Livent
(U.S.) Inc., a Delaware corporation ("Livent U.S."); Livent Realty (New York)
Inc., a Delaware corporation ("Livent N.Y."); Livent Realty (Chicago) Inc., a
Delaware corporation ("Livent Chicago," and together with Livent, Livent
International, Livent U.S. and Livent N.Y., collectively, the "Sellers"); and
SFX Entertainment, Inc., a Delaware corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, on November 18, 1998, (the "Petition Date"), each of the
Sellers other than Livent International filed a voluntary petition for relief
under chapter 11, title 11 of the United States Code, 11 U.S.C. ss. ss. 101, et
seq. (the "U.S. Bankruptcy Code"), and on May 28, 1999 (the "International
Petition Date"), Livent International filed a voluntary petition for relief
under chapter 11 of the U.S. Bankruptcy Code, with each filing in the United
States District Court for the Southern District of New York (the "U.S.
Bankruptcy Court"), Case Nos. 98-B-48309 through 98-B-48312 AJG and 99-B-43450
AJG (the "U.S. Bankruptcy Cases"), which U.S. Bankruptcy Cases are currently
pending and are being jointly administered;
WHEREAS, on November 19, 1998, Livent filed an application for an order
under sections 4, 5, 6, 7, 11 and 18.6(2) of the Companies' Creditors
Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), and under the
Business Corporations Act (Ontario), R.S.O. 1990, c. B-16 (the "OBCA") in the
Superior Court of Justice (Ontario) (the "Canadian Bankruptcy Court"), Court
File Number 98-CL-3162 (the "Canadian Bankruptcy Case," and collectively with
the U.S. Bankruptcy Cases, the " Bankruptcy Cases");
WHEREAS, the Buyer desires to purchase certain assets of the Sellers,
which assets comprise substantially all of the Sellers' assets, from the
Sellers, and the Sellers desire to sell such assets to the Buyer pursuant to
Section 363 of the U.S. Bankruptcy Code and pursuant to the CCAA;
WHEREAS, the Buyer wishes to assume from the Sellers, and the Sellers
wish to assign to the Buyer, certain executory contracts and unexpired leases
pursuant to Section 365 of the U.S. Bankruptcy Code and pursuant to the CCAA,
all of which were previously assumed, or shall be assumed, by the Sellers
pursuant to Section 365 of the U.S. Bankruptcy Code and pursuant to the CCAA;
and
WHEREAS, simultaneously with the execution of this Agreement, the Buyer
and the Sellers are entering into the Deposit Escrow Agreement, and the Buyer is
delivering the Deposit to the Deposit Escrow Agent;
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
<PAGE>
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the meanings set forth below. Certain other
capitalized terms used in this Agreement but not defined in this Article I shall
have the meanings ascribed to such terms elsewhere in this Agreement.
"Access Agreement" shall mean that certain letter, dated May 14, 1999,
from the Buyer to the Sellers providing for, among other things, an indemnity
with respect to the Buyer's access to the Premises.
"Accounts Receivable" shall mean all amounts and notes receivable of
the Sellers relating to the Business and/or the Purchased Assets (other than
Ticketmaster Receivables), existing on the Closing Date, and the full benefit of
all security (if any) for such amounts.
"Adjusted Cash Purchase Price" -- See Section 2.2(a).
"Adjustment Date" shall mean 11:59 p.m. on the day preceding the
Closing Date.
"Advance Ticket Sales" shall mean ticket sales by the Sellers or
Sellers' Ticket Agents in respect of the Productions, the performance of which
is to occur on dates on or after the Closing Date.
"Affiliate" shall mean, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person; provided, that, the creditors of any Seller
shall not be considered the Affiliate of any Seller as a result of such creditor
relationship.
"Agreement" shall mean this Asset Purchase Agreement, including all
schedules and exhibits hereto, as it may be amended from time to time in
accordance with its terms.
"Alternative Transaction" shall mean a transaction pursuant to a bona
fide proposal made by any Person or Persons (other than the Buyer and any
Affiliate of the Sellers) to acquire, directly or indirectly, all or
substantially all of the assets of the Business or more than 50% of the voting
power of the equity securities of Livent on terms which the Board of Directors
of Livent (or the restructuring committee thereof) or one or more members of
such restructuring committee duly authorized by such committee, after timely
notification to the creditors' committee and the Buyer, determines in its good
faith judgment to be higher or otherwise better to the Sellers in accordance
with the Break-Up Fee Order (including the bidding procedures authorized
thereby) than the transaction provided for in this Agreement (taking into
account all factors relating to such proposed transaction, including, but not
limited to, the consideration to be paid, the financing thereof, the proposed
timing thereof and all other conditions thereto).
"Assignment and Assumption Agreement" shall mean the assignment and
assumption agreement to be executed at the Closing by the Buyer and the Sellers
in form and substance reasonably satisfactory to the Sellers and the Buyer.
-2-
<PAGE>
"Assignment of Leases" -- See Section 3.2(g).
"Assumed Collective Bargaining Agreements" -- See Section 7.1(a).
"Assumed Contracts" shall mean (A) those Executory Contracts identified
in the Schedule of Assumed Executory Contracts, attached hereto as Schedule
4.14(a)(i) (other than the Assumed Collective Bargaining Agreements), which are
to be assumed by the Sellers and assigned by the Sellers to the Buyer pursuant
to this Agreement, (B) the other Contracts identified in the Schedule
4.14(a)(ii), which are to be assigned by the Sellers to the Buyer pursuant to
this Agreement, (C) any Contract specifically relating to the Business entered
into from and after the date hereof but prior to the Closing Date by any Seller
in accordance with Section 6.1(a), (f), (g), (h) or (i), and (D) any Contract
entered into in connection with Sections 9.6 or 9.8 which the Buyer approves
(which approval shall not be unreasonably withheld or delayed).
"Assumed Contract Deficiencies" -- See Section 6.8(b).
"Assumed Liabilities" -- See Section 2.5.
"Balance Sheet Date" -- See Section 4.7.
"Bankruptcy Cases" -- See the Recitals hereto.
"Break-Up Fee Order" -- See Section 6.6.
"Business" shall mean all the business activities and operations of the
Sellers, engaged in the ordinary course as of the date hereof, relating to the
development, production and presentation of live theatrical productions, and the
ownership and operation of theaters in the United States and Canada, except
those activities and operations specifically relating to the Excluded Assets.
"Business Day" shall mean any day other than Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in New York
City or Toronto are authorized by law or other governmental action to close.
"Buyer" -- See the Preamble hereto.
"Buyer Material Adverse Effect" shall mean a material adverse effect on
the financial condition, operations or business of the Buyer taken as a whole or
on the ability of the parties hereto to consummate the transactions contemplated
by the Transaction Documents.
"Buyer SEC Documents" -- See Section 5.7.
"Buyer Transaction Documents" shall mean this Agreement, the Exhibits
and Schedules hereto and all other agreements, certificates or documents
delivered by the Buyer in connection with the consummation of the transactions
contemplated herein, including, without limitation, the Escrow Agreements, the
Put Obligation, the Registration Rights Agreement, the
-3-
<PAGE>
Assignment and Assumption Agreement, the Assignment of Leases, the Other Leases
Assignment and the Warrants.
"CA" shall mean the Competition Act (Canada), as amended.
"Canadian Bankruptcy Case" -- See the Recitals hereto.
"Canadian Bankruptcy Court" -- See the Recitals hereto.
"Canadian Leases" shall mean the Leases (other than the New York
Sublease) that are described on Schedule 4.11(c).
"Canadian Order" shall mean an order of the Canadian Bankruptcy Court,
in all material respects in the form attached hereto as Exhibit A, which form is
acceptable to Buyer and which, inter alia: (i) appoints Ernst & Young Inc. as
interim receiver (in such capacity, "EY"), pursuant to the Courts of Justice Act
(Ontario) and the CCAA, of such assets, properties and undertakings of Livent
situate in Canada which comprise the Purchased Assets under this Agreement and
directing EY to enter into this Agreement in respect of those assets, properties
and undertakings; (ii) provides that, upon closing of the transactions
contemplated by this Agreement, all right, title and interest in the assets,
properties and undertakings of Livent comprised in the Purchased Assets situated
in Canada sold pursuant hereto shall irrevocably vest in the Buyer, and its
successors and assigns, free and clear of all Liens, right, title or interest
therein, of any other Person, except to the extent of the Permitted Closing
Liens; and (iii) provides that the Bulk Sales Act (Ontario) does not apply to
the sale of the Purchased Assets pursuant to this Agreement.
"Canadian Pension/Benefit Plans" means all Canadian plans,
arrangements, agreements, programs, policies or practices, whether oral or
written, formal or informal, funded or unfunded, which any of the Sellers is a
party to or bound by or under which any of the Sellers has any liability or
contingent liability or which has any application to the employees or any former
employees of any of the Sellers, (a) relating to retirement savings or pensions,
including any defined benefit pension plan, defined contribution pension plan,
group registered retirement savings plan or supplemental pension or retirement
plan or (b) any bonus, profit sharing, deferred compensation, incentive
compensation, hospitalization, health, dental, disability or other benefit plan
with respect to any of their employees or former employees, individuals working
on contract with them or other individuals providing services to them of a kind
normally provided by employees.
"Cash" shall mean money, currency or a credit balance in a current
account or a deposit account at a financial institution.
"Cash Equivalents" shall mean (i) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision thereof maturing within one year from the date of
-4-
<PAGE>
acquisition and, at the time of acquisition, having the highest rating
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) commercial paper issued by any bank or any bank holding
company owning any bank maturing no more than one year from the date of its
creation and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Corporation or Moody's Investors Service, Inc.;
and (iv) certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition issued by any bank or by any commercial bank
organized under the laws of the United States of America or any state thereof
having combined capital and surplus of not less than $250,000,000.
"CCAA" -- See the Recitals hereto.
"CERCLA" -- See the definition of Hazardous Materials.
"Chicago Certificate" -- See Section 9.6.
"Chicago Mortgage" shall mean that certain Mortgage, dated as of April
23, 1997, from Livent Chicago to the City of Chicago.
"Chicago Theater" shall mean the real property described in Schedule
4.11(a)(i) and the Improvements thereat, commonly known as the Ford Center for
the Performing Arts, located at 24 West Randolph, Chicago, Illinois.
"Chicago Theater Deed" -- See Section 3.2(e).
"Claims" -- See the definition of Excluded Assets.
"Closing" -- See Section 3.1.
"Closing Date" -- See Section 3.1.
"Closing Date Balance Sheet" -- See Section 2.4(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean shares of the Class A Common Stock, par value
$0.01 per share, of the Buyer.
"Confidentiality Agreement" -- See Section 6.3.
"Consent" shall mean any approval, authorization, waiver, consent,
order or notification by or on behalf of any Person that is not a party to this
Agreement, or any waiver of, or exemption or variance from any Law or Order.
"Construction Materials" shall mean all of the Sellers' right, title
and interest, if any, in and to any building materials, supplies, hardware, and
carpeting relating to the construction or improvement of the Material Real
Property (whether on site at the Material Real Property or on order as of the
Closing).
-5-
<PAGE>
"Contractor Estimate" -- See Section 9.3.
"Contracts" shall mean, collectively, the Leases, Space Leases,
Purchase Orders, Sales and Ticket Orders, Rights Agreements, the Equipment and
Machinery Leases, licenses to use any Intellectual Property, subscription lists,
and partnership or joint venture agreements, license agreements, service
contracts, individual employment, severance or bonus agreements covering any
employee of the Sellers, commission and consulting agreements, Assumed
Collective Bargaining Agreements, suretyship contracts, distribution agreements,
contracts or commitments limiting or restraining the Sellers with respect to the
Business from engaging or competing in any lines of business or with any Person,
documents granting a power of attorney with respect to the Purchased Assets,
agreements not made in the ordinary course of business, options to purchase any
assets or property rights of the Business, and all other agreements to which any
of the Sellers is a party that relate to the Purchased Assets, but excluding the
Excluded Contracts.
"Corporate Documentation" -- See definition of Excluded Assets.
"Credit Agreement" shall mean the Debtor-in-Possession Credit
Agreement, dated as of February 22, 1999, by and among Livent, Livent U.S.,
Livent N.Y., Livent Chicago, the lenders party thereto and Silver Oak Capital,
L.L.C., as agent, as it may be amended from time to time and any credit
agreement that refinances such Credit Agreement.
"Deposit" -- See Section 2.6.
"Deposit Escrow Agent" shall mean IBJ Whitehall Bank & Trust Company, a
New York banking corporation, as escrow agent under the Deposit Escrow
Agreement.
"Deposit Escrow Agreement" shall mean the Deposit Escrow Agreement,
dated as of the date hereof, among the Sellers, the Buyer and the Deposit Escrow
Agent.
"DRVS" shall mean Dundee Realty (Victoria-Shuter) Corporation, and its
successors and assigns.
"Dundee Agreement" shall have the meaning given to that term in the
Dundee Term Sheet.
"Dundee Term Sheet" shall mean the term sheet attached hereto as
Exhibit B.
"Employee Benefit Plan" shall mean an Employee Pension Benefit Plan or
an Employee Welfare Benefit Plan where no distinction is required by the context
in which the term is used.
"Employee Pension Benefit Plan" shall mean an "employee pension benefit
plan," as such term is defined in Section 3(2) of ERISA, which covers any
employee or former employee of the Sellers who performed services for the
Business, or any spouse or beneficiary of either.
-6-
<PAGE>
"Employee Welfare Benefit Plan" shall mean an "employee welfare benefit
plan," as such term is defined in Section 3(1) of ERISA, which covers any
employee or former employee of the Sellers who performed services for the
Business, or any spouse or beneficiary of either.
"Engineering Consultant" shall mean Terra Probe or such other
engineering consultant reasonably acceptable to the Sellers and the Buyer.
"Environmental Claim" -- See Section 4.16(j).
"Environmental Laws" shall mean all federal, state, provincial, local
and foreign laws, statutes, regulations, ordinances, rules, guidelines, orders,
regulations and other provisions having the force or effect of law, all judicial
and administrative orders and determinations, and all common law concerning
pollution or protection of the environment, including, but not limited to, all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Materials.
"Environmental Permits" shall mean permits, licenses, certificates,
registrations and approvals required by the Environmental Laws for the operation
of the Business, including, without limitation, the ownership and leasing, as
the case may be, and operation of the Purchased Real Property and the Leased
Real Property.
"Equipment and Machinery" shall mean, to the extent used in the
Business, (i) all the equipment, machinery, furniture, fixtures and
improvements, tooling, spare parts and supplies owned or leased by the Sellers
with respect to the operations of the Business on the Closing Date, except to
the extent the same are attached to real property and considered a portion
thereof under applicable law, and (ii) any rights of the Sellers to the
warranties (to the extent assignable) and licenses received from manufacturers,
sellers and lessors of the aforesaid items; except, in each case, for those that
are Excluded Assets.
"Equipment and Machinery Leases" shall mean the leases for Equipment
and Machinery.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Agent" shall mean IBJ Whitehall Bank & Trust Company, a New
York banking corporation, or such other Person reasonably acceptable to the
Buyer and the Sellers, as escrow agent under the Escrow A Agreement, the Escrow
B Agreement, the Escrow C Agreement and the Escrow D Agreement.
"Escrow A Agreement" shall mean the Escrow Agreement described in
Section 2.7(c) to be dated as of the Closing Date, by and among the Sellers, the
Buyer and the Escrow Agent, in form and substance reasonably satisfactory to the
Sellers and the Buyer.
-7-
<PAGE>
"Escrow Agreements" shall mean, collectively, the Deposit Escrow
Agreement, the Escrow A Agreement. the Escrow B Agreement, the Escrow C
Agreement and the Escrow D Agreement.
"Escrow B Agreement" shall mean the Escrow Agreement described in
Section 2.7(d) to be dated as of the Closing Date, by and among the Sellers, the
Buyer and the Escrow Agent, in form and substance reasonably satisfactory to the
Sellers and the Buyer.
"Escrow C Agreement" shall mean the Escrow Agreement described in
Section 2.7(e) to be dated as of the Closing Date, by and among the Sellers, the
Buyer and the Escrow Agent, in form and substance reasonably satisfactory to the
Sellers and the Buyer.
"Escrow D Agreement" shall mean the Escrow Agreement described in
Section 2.7(f) to be dated as of the Closing Date, by and among the Sellers, the
Buyer and the Escrow Agent, in form and substance reasonably satisfactory to the
Sellers and the Buyer.
"Estimated Closing Date Balance Sheet" -- See Section 2.3(a).
"Estimated Purchase Price" -- See Section 2.2(b).
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended.
"Excluded Assets" shall mean the following:
(i) all of the Sellers' prepaid insurance premiums and deposits,
including, but not limited to, deposits of the Sellers held by utilities or
under Leases or Equipment and Machinery Leases, and rights to refunds or
adjustments in respect of the period prior to the Closing Date and all
rights to insurance proceeds or other insurance contract recoveries in
respect of liabilities retained by the Sellers pursuant to Article VII;
except to the extent set forth on Schedule 1.1, which lists certain prepaid
expenses that are not Excluded Assets;
(ii) the capital stock or equity interest held by any Seller of any
corporation or other entity, except for Sellers' limited partnership
interests in The Jekyll Company Limited Partnership and The Swan Lake
Company Limited Partnership, New York limited partnerships;
(iii) any asset of any Seller that would constitute a Purchased Asset
(if owned by such Seller on the Closing Date) that is conveyed or otherwise
disposed of during the period from the date hereof until the Closing Date
(y) in the ordinary course of business and not in violation of the terms of
this Agreement, or (z) as otherwise expressly permitted by the terms of this
Agreement;
(iv) all losses, loss-carry forwards and rights to receive refunds,
credits and loss-carry forwards with respect to any and all Taxes of any
Seller or Taxes of landlords payable by the Sellers pursuant to the Leases,
incurred or accrued on or prior to the Closing Date, including, but not
limited to, interest receivable with respect thereto;
-8-
<PAGE>
(v) any rights, claims, credits, allowances, rebates, causes of action
(including, but not limited to, all causes of action arising under Sections
510, 544 through 550 and 553 of the U.S. Bankruptcy Code or under similar
state laws, including, but not limited to, fraudulent conveyance claims, and
all other causes of action of a trustee and debtor-in-possession under the
U.S. Bankruptcy Code) or rights of set-off (collectively, "Claims") of any
Seller or any Affiliate of any Seller arising out of or directly relating to
the Bankruptcy Cases, including, but not limited to, any claims (as defined
in Section 101(5) of the U.S. Bankruptcy Code) filed, scheduled or otherwise
arising in the Bankruptcy Cases, except for Claims arising after the
Petition Date (or, in the case of Livent International, after the
International Petition Date) in the ordinary course of business and relating
to any of the Purchased Assets or the Assumed Liabilities;
(vi) corporate seals, minute books, charter documents, corporate stock
record books, registers of other securities, original tax and financial
records and such other books and records as pertain to the organization,
existence, share capitalization or debt financing of the Sellers, and any
files, books and records relating to the Sellers' Affiliates (collectively,
the "Corporate Documentation");
(vii) all claims or causes of action (whether asserted or unasserted),
demands, judgments and pending litigation (other than the Claims) as to
which any Seller is a claimant, plaintiff, defendant, judgment creditor or
beneficiary arising prior to the Closing Date, including, but not limited
to, any claims against any legal, accounting, underwriting, financial
advisory or other professional firm retained by any Seller, any of Sellers'
lenders, Garth H. Drabinsky, Myron I. Gottlieb and any derivative actions
(including, but not limited to, the proceeding pending in the Canadian
Bankruptcy Court between Livent and Garth H. Drabinsky, Myron I. Gottlieb,
Robert Topol and King Commodity Services Limited); other than those claims,
demands, causes of action, judgments and pending litigation arising after
the Petition Date (or, in the case of Livent International, after the
International Petition Date) in the ordinary course of business and relating
to any of the Purchased Assets or Assumed Liabilities;
(viii) any rights of the Sellers under this Agreement, the other
Transaction Documents or any other agreement between any Seller and the
Buyer arising out of the transactions contemplated hereby and thereby;
(ix) any property, casualty, workers' compensation or other insurance
policy or related insurance services contract relating to any Seller or any
of its Affiliates or any of such Seller's property and any rights
(including, but not limited to, prepaid premiums and deposits) of any Seller
or any of its Affiliates under such insurance policy or contract, other than
rights under such insurance policies or contracts with respect to any
Assumed Liability or any casualty affecting any of the Purchased Assets if
and to the extent purchased (other than prepaid premiums and deposits); and
any award in respect of condemnation, eminent domain or expropriation
(except to the extent assigned to the Buyer pursuant to Section 9.3 hereof);
(x) the assets listed on Schedule 1.2 and the Excluded Contracts;
-9-
<PAGE>
(xi) all claims and other amounts due to the Sellers from any of their
Affiliates or any of Sellers' or their Affiliates' past or present
employees;
(xii) the Vancouver Ford Centre Theater, located in Vancouver, British
Columbia, Canada, the land upon which it is located (including the land
described on Schedule 1.3A hereto (but in no event shall such excluded land
include the Land)) and all agreements, contracts, instruments, rights,
interests, licenses and permits, equipment and other property specifically
related thereto (but other than the Assumed Contracts) and including any
related claims;
(xiii) any interest of any Seller in the North York Ford Centre
Theater, located in Toronto, Ontario, Canada, the land upon which it is
located (including the land described on Schedule 1.3B hereto (but in no
event shall such excluded land include the Land)) and all agreements,
contracts, instruments, rights, interests, licenses and permits, equipment
and other property specifically related thereto (but other than the Assumed
Contracts) and including any related claims;
(xiv) the Livent Headquarters, the land upon which it is located
(including the land described on Schedule 1.3C hereto (but in no event shall
such excluded land include the Land)) and all agreements, contracts,
instruments, rights, interests, licenses and permits, equipment and other
property specifically related thereto (including, without limitation, the
parking areas and/or facilities described on Schedule 1.3C hereto but other
than the Assumed Contracts) and including any related claims;
(xv) those certain parcels of real estate, located in Toronto, Ontario,
Canada, as more particularly described in Schedule 1.3D hereto (the "DRVS
Land") including, without limitation, all improvements, if any, thereon and
all agreements, contracts, instruments, rights, interests, licenses and
permits, equipment and other property specifically related thereto (but
other than the Assumed Contracts) and including any related claims and any
residual density rights in excess of the density existing on the Land on
which the Pantages Theater is located as of the date hereof;
(xvi) all Ticketmaster Receivables;
(xvii) all contracts, intellectual property and other rights,
agreements, relationships, branded inventory and merchandise, sets,
costumes, other physical production elements, receivables and other assets
relating to: Showboat (except such physical production elements contemplated
by any agreement with Network Presentation LLC for its non-equity tour of
Showboat and any related receivables), Barrymore, Parade, Kiss of the Spider
Woman, Joseph and the Amazing Technicolor Dreamcoat, Sunset Boulevard, Music
of the Night, Candide and Aspects of Love; and
(xviii) all inventory and accounts receivable (except as relates to
Network Presentation LLC, as described in the preceding clause) related to
any of the foregoing Excluded Assets.
-10-
<PAGE>
"Excluded Contracts" shall mean those agreements, contracts,
instruments and rights of the Sellers (i) that specifically relate to any of the
Excluded Assets or (ii) are set forth on Schedule 1.4.
"Excluded Liabilities" -- See Section 2.5.
"Executory Contracts" shall mean all Contracts entered into by one or
more of the Sellers (other than Livent International) before the Petition Date
and, in the case of Livent International, before the International Petition
Date, and which, in each case, are executory or unexpired as of the Closing
Date.
"Files and Records" shall mean all files and records, whether in hard
copy, magnetic format or other retrievable or deliverable form, of the Sellers
specifically relating to the Purchased Assets or the Assumed Liabilities (but
only to the extent they are in the possession, or under the control, of the
Sellers), except for those that specifically relate to the Excluded Assets.
"FIRPTA Certificate" shall mean a certification, made under penalties
of perjury and in compliance with the treasury regulations under Section 1445 of
the Code, that such Person is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and the
treasury regulations promulgated thereunder).
"GAAP" shall mean Canadian generally accepted accounting principles, as
in effect from time to time.
"Governmental Authority" shall mean any agency, division, subdivision,
audit group, regulatory arm, instrumentality or procuring office of the
Government of the United States, the states, counties, cities or other local
political subdivisions thereof, Canada, the provinces thereof, municipal or
local government or any other foreign government, including but not limited to,
the employees or agents thereof.
"Hazardous Materials" shall mean and include any substance which is
deemed to be hazardous, toxic, hazardous waste, radioactive or a contaminant
under any Environmental Law including, but not limited to, "hazardous
substances" as defined by the Comprehensive Environmental Response Compensation
and Liability Act, as amended ("CERCLA"), a "hazardous waste" as defined by the
Resource Conservation and Recovery Act ("RCRA"), as amended, polychlorinated
byphenyls, petroleum products or byproducts, solvents, pesticides or asbestos.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"ICA" shall mean the Investment Canada Act, as amended.
"Improvements" shall mean the buildings, improvements, fixtures and
structures located on the Land and/or demised under the Leases.
"Information Package" -- See Section 4.7.
-11-
<PAGE>
"Initial Cash Amount" -- See Section 2.2(a).
"Intangible Assets" shall mean all intangible personal property rights
of the Sellers in connection with the Business and the Purchased Assets
(including, without limitation, air rights, development rights and entitlements
and other intangible property relating to the Purchased Real Property and the
Leased Real Property) and all goodwill of the Sellers relating to the Business,
except for those that are Excluded Assets, if any.
"Intellectual Property" shall mean all trademarks, service marks, trade
names, domain names, websites, brands, private labels, patents, copyrights,
know-how, trade dress, or trade secrets and licenses, promotional and
advertising materials, and the goodwill associated therewith, including, without
limitation, the Livent Trademarks, and all rights with respect to any of the
foregoing that any Seller owns or possesses relating to any of the Purchased
Assets or the operations of the Business, except for those that are Excluded
Assets, if any.
"International Petition Date" -- See the Recitals hereto.
"Inventory" means all inventory of the Sellers relating to the
Business, including, (i) all the finished goods, raw materials, work in progress
and inventoriable supplies owned by the Sellers on the Closing Date for use in
the operations of the Business and (ii) any and all rights of the Sellers to the
warranties received from their suppliers, manufacturers, distributors or other
vendors with respect to such inventory (to the extent assignable) and related
claims, credits, rights of recovery and set-off with respect thereto; except, in
each case, for those that are Excluded Assets, if any.
"Knowledge of the Sellers," "Sellers' Knowledge," "known" to the
Sellers, "best of knowledge" of the Sellers, matters of which the Sellers are
"aware" and language of similar import shall mean all matters known by Messrs.
Roy L. Furman, David R. Maisel, Robert B. Webster and Paul Mellinger, in each
case after reasonable due diligence and inquiry of appropriate individuals
(including Daniel Brambilla, the managers of the theaters included in the
Purchased Assets and the managers of the Sellers responsible for managing each
of the Productions).
"Land" shall mean, except as provided in and solely in connection with
Section 4.16, the parcels of land described in Schedule 4.11(a) hereto and the
parcels of land demised under the Leases, in each case, together with all of the
Sellers' right, title and interest in and to all rights of way, easements,
reciprocal easement agreements, reservations, privileges and appurtenances, and
other rights and interests of the Sellers appurtenant to the Land, including,
without limitation, all right, title and interest of the Sellers, if any, in and
to (a) the strips and gores, streets, highways, other public ways and alleys,
opened or proposed, abutting, in front of or adjoining or adjacent thereto (and
all right, title and interest, if any, of Sellers in and to any unpaid award for
any damage to the Premises by reason of change of grade of any street or highway
or other public way), (b) any water, oil, gas and mineral rights owned by, or
leased to, the Sellers and relating to the Land and (c) all off-street parking
rights and spaces relating to the Land.
-12-
<PAGE>
"Law" -- See Section 4.4.
"Leased Real Property" shall mean all of the Sellers' right, title and
interest, as tenant, under the Leases in and to the Land described thereunder
and the Improvements on such Land and/or demised under the Leases.
"Leases" shall mean those leases more particularly described in
Schedule 4.11(c) attached hereto.
"Liability" shall mean any liability or obligation (whether known or
unknown, asserted or unasserted, fixed or contingent, accrued or unaccrued,
liquidated or unliquidated, secured or unsecured, and whether due or to become
due), including, but not limited to, any liability for Taxes.
"Licenses and Permits" shall mean the government permits,
authorizations and licenses issued by any national, state, provincial, local or
other domestic or foreign governmental authority used in the Business, including
but not limited to, those listed on Schedule 1.5, except for those that are
Excluded Assets, if any, and except for liquor licenses.
"Lien" shall mean any mortgage, charge, pledge, security interest,
option, easement, recorded or registered, as applicable, covenant, condition or
restriction, right of way, judgment lien, tax lien, mechanic's, materialman's,
carrier's, worker's, repairer's, construction and similar lien and statutory or
other lien, conditional sale agreement, or other encumbrance or, other than in
the case of the Premises, interest of any nature whatsoever.
"Livent" -- See the Preamble hereto.
"Livent Chicago" -- See the Preamble hereto.
"Livent Headquarters" shall mean the office building of Livent located
at 165 Avenue Road, Toronto, Ontario, Canada, which premises are used as its
corporate headquarters and house certain of the Sellers' managerial,
administrative and other employees.
"Livent International" -- See the Preamble hereto.
"Livent N.Y." -- See the Preamble hereto.
"Livent Trademarks" shall mean all of the Sellers' rights, title and
interests in all registered or unregistered trademarks, service marks, trade
names and domain names, together with the goodwill associated therewith, for the
name "Livent" or any variation or derivative thereof.
"Livent U.S." -- See the Preamble hereto.
"Losses" -- See Section 11.2.
-13-
<PAGE>
"Mandatory Cure Items" shall mean each of the following Title Defects
(but only if such Title Defects are of record or on file, as applicable, in the
applicable recording or filing office, against the parcel of Material Real
Property in question or, in the case of Material Real Property located in
Canada, registered against Livent in the sheriff's office in the county or
district where the Material Real Property is located, whether described in a
Title Commitment, or first arising or first disclosed by the Title Company or
otherwise to the Sellers and the Buyer after the date of the Title Commitment
for the parcel of Material Real Property in question and prior to the Closing
Date: (a) any mortgage and assignment of leases and rents, and UCC-1 and
Personal Property Security Act ("PPSA") financing statements relating thereto
other than the Chicago Mortgage and any assignments of leases and UCC and PPSA
financing statements relating thereto; (b) any lien, encumbrance, covenant,
easement or restriction voluntarily created by the Sellers after the date of
this Agreement; (c) judgment liens against the Sellers, and tax liens and
brokers' liens; (d) any mechanics', materialmens', carriers', workers',
repairers', construction and similar liens; and (e) all other liens, judgments
and encumbrances that can be cured or removed by the payment of a liquidated sum
of money not to exceed $600,000 in the aggregate for all Material Real Property.
"Material Assumed Contracts" shall mean the following Assumed
Contracts: (i) all Rights Agreements with respect to Fosse, Phantom of the Opera
and Ragtime and all other Assumed Contracts that are necessary for the operation
of such Productions, (ii) all Rights Agreements with respect to Pal Joey and
Seussical and (iii) all Assumed Contracts that affect the Premises, including
those running with the Land.
"Material Real Property" shall mean, collectively, the Pantages
Theater, the Chicago Theater and the New York Theater.
"New York Chattel Mortgage" shall mean that certain Master Lease of
Personal Property #3267, dated September 18, 1997, by and between, Charter
Financial, Inc. and Livent N.Y. and all ancillary documents and agreements
related thereto.
"New York Fixture Lien" shall mean the Lien, if any, arising under or
on account of the New York Chattel Mortgage.
"New York Master Lease" shall mean that certain Amended and Restated
Agreement of Master Lease, dated as of December 13, 1996, as amended by that
certain Letter Agreement, dated June 4, 1998, as further amended by that certain
Letter Agreement, dated June 16, 1998, as further amended by that certain
Amendment to Amended and Restated Agreement of Master Lease, dated as of June
30, 1998, as further amended by that certain Second Amendment to Amended and
Restated Agreement of Master Lease, dated as of November 5, 1998, by and between
42nd St. Development Project, Inc., as landlord, and The New 42nd Street, Inc.,
as tenant.
"New York Sublease" shall mean that certain Agreement of Sublease made
by and between The New 42nd Street, Inc., as landlord, and Livent N.Y., as
tenant, dated as of June 14, 1996, as amended by that certain Consent and
Depositary Agreement, dated as of February 22, 1999, made by 42nd St.
Development Project, Inc., The New 42nd Street, Inc. and Livent N.Y.,
-14-
<PAGE>
and that certain Stipulation and Order Respecting Assumption and Assignment of
Ford Center Sublease by and among The New 42nd Street, Inc., Livent N.Y. and
Angelo Gordon & Co., L.P., for itself and certain funds under its management,
and entered by the U.S. Bankruptcy Court in Case No. 98B 48312 (AJG), on
December 30, 1998, as modified by that certain Final Order Pursuant to
Bankruptcy Code Sections 105, 364 and 365 and Bankruptcy Rules 2002 and 4001,
entered by the U.S. Bankruptcy Court, in Case No. 98B 48312 (AJG), on December
30, 1998.
"New York Theater" shall mean Livent N.Y.'s leasehold interest in the
real property and all Improvements thereon commonly known as the Ford Center for
the Performing Arts, located at 213 West 42nd Street, New York, NY.
"No Action Letter" -- See Section 6.10.
"Non-Interference Agreement" shall mean that certain non-interference
agreement dated May 20, 1999 by and among Martin Bell, Livent and Livent (U.S.).
"NYPCO" -- See Section 9.6.
"OBCA" -- See the Recitals hereto.
"Order" shall mean any order, writ, judgment, award, injunction or
decree of any court or other Governmental Authority of competent jurisdiction.
"ordinary course of business" when used in this Agreement with respect
to any of the Sellers, shall mean in the ordinary course of such Seller's
business from and after the Petition Date.
"Pantages Development Site" shall mean the lands described as the Lot
on Plan attached to Site Specific Zoning Amendment By-law No. 670-91, as amended
by By-law 1997-0202.
"Pantages Naming Shortfall" shall mean the positive difference, if any,
between $600,000 and the amount of revenue recognized with respect to the 12
month period following the end of the quarter in which the Closing Date occurs
(the "Pantages Naming Period") by the Buyer in its financial statements in
accordance with U.S. GAAP with respect to the naming rights for the Pantages
Theater.
"Pantages Theater" shall mean that the real property described in
Schedule 4.11(a)(ii) and all Improvements thereon commonly known as the Pantages
Theater, located at 263 Yonge Street and 232 and 244 Victoria Street, Toronto,
Ontario, Canada.
"Pantages Ticket Surcharge" shall mean the obligation of Livent to
collect on behalf of The Corporation of the City of Toronto at the time of the
ticket sale and remit to The Corporation of the City of Toronto a ticket
surcharge of 60(cent)per ticket, plus Goods and Services Tax, in respect of
public performances at the Pantages Theater, all as is more particularly set
forth in Amendment No. 6 to the Master Agreement made as of January 1, 1997
between Livent and The Corporation of the City of Toronto.
-15-
<PAGE>
"Permitted Closing Liens" shall mean (i) Liens for Taxes, assessments,
local improvement rates, utilities, vault and water and sewer charges or other
governmental or quasi-governmental charges, in each case that are not yet due
and payable, (ii) revocability or lack of right to maintain vaults, coal chutes,
excavations or sub-surface equipment beyond the line of any of the Premises,
(iii) the terms, provisions and conditions of the Leases, (iv) the state of
facts reflected on the surveys listed on Schedule 1.7 hereto and any additional
state of facts an accurate up-to-date survey and inspection would disclose to
the extent such additional state of facts does not render title unmarketable,
(v) the rights of tenants or licensees as tenants or licensees only under the
Space Leases, (vi) Liens and other matters set forth on Schedule 1.8(b) hereto,
(vii) the title, rights and interest of the lessor under the New York Sublease,
and the title, rights and interest of the lessor and of the lessee under the New
York Master Lease and (viii) the title, rights and interest of the lessor under
each Canadian Lease and any liens, encumbrances or other matters to which the
title or interest of such lessor may be subject.
"Permitted Liens" shall mean (i) Liens for Taxes, assessments, local
improvement rates, utilities, vault and water and sewer charges or other
governmental or quasi-governmental charges, in each case that are not yet due
and payable, (ii) Liens that are discharged at or prior to the Closing and any
other Lien which is removed from any of the Purchased Assets, pursuant to, or by
virtue of, the U.S. Order or the Canadian Order, (iii) revocability or lack of
right to maintain vaults, coal chutes, excavations or sub-surface equipment
beyond the line of any of the Premises, (iv) the terms, provisions and
conditions of the Leases, (v) the state of facts reflected on the surveys listed
on Schedule 1.7 hereto and any additional state of facts an accurate up-to-date
survey and inspection would disclose to the extent such additional state of
facts does not render title unmarketable, (vi) the rights of tenants or
licensees as tenants or licensees only under the Space Leases, (vii) Liens and
other matters set forth on Schedule 1.8(a) hereto, (viii) the title, rights and
interest of the lessor under the New York Sublease, and the title, rights and
interest of the lessor and of the lessee under the New York Master Lease and
(ix) the title, rights and interest of the lessor under each Canadian Lease and
any liens, encumbrances or other matters to which the title or interest of such
lessor may be subject.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, estate, trust, unincorporated
organization, limited liability company or Governmental Authority or any group
of the foregoing acting in concert.
"Petition Date" -- See the Recitals hereto.
"PPSA" -- See definition of Mandatory Cure Items.
"Premises" shall mean the Purchased Real Property and the Leased Real
Property.
"Pre-Production Expenditures" shall mean the aggregate expenditures to
develop the property rights (including payments to authors, composers and the
like), casting, rehearse, conduct readings and workshops, build the physical
production, advertise, market and promote the Productions and similar
pre-production expenditures, in each case prior to their first paid performance.
-16-
<PAGE>
"Proceedings" -- See Section 4.8.
"Productions" shall mean the following live theatrical productions
produced, presented, licensed or under development by the Sellers that comprise
part of the Purchased Assets: "Fosse," "Pal Joey," "Phantom of the Opera,"
"Playhouse Creatures," "Ragtime," "Sally Hemmings," "Seussical" and "Sweet Smell
of Success."
"Property Permits" shall mean all variances, special use permits,
certificates of occupancy, permits, authorizations and licenses issued by, or
which are required to be issued by, any Governmental Authority in connection
with the Sellers' ownership or leasing, as the case may be, of the Premises,
operation of the Business at the Premises and/or the construction, use,
occupancy and maintenance of all or any portion of the Premises other than
Excluded Assets and liquor licenses.
"Purchase Orders" shall mean the Sellers' outstanding purchase orders,
contracts or other commitments to suppliers of goods and services for materials,
supplies, services or other items used in the Business.
"Purchase Price" -- See Section 2.2(a).
"Purchase Price Adjustment" -- See Section 2.4(d).
"Purchased Assets" shall mean all of the tangible and intangible assets
of the Sellers existing on the Closing Date that relate to the Business (which
assets comprise substantially all of the Sellers' assets), including, but not
limited to, the following: Cash and Cash Equivalents; the Accounts Receivable;
Construction Materials; the rights of the Sellers under the Assumed Contracts;
Equipment and Machinery; Files and Records; Intellectual Property; Intangible
Assets; all subscription lists (including the means to generate electronic
versions thereof, to the extent available), Inventory; Licenses and Permits (to
the extent transferable by the Sellers); Premises; Sellers' personal property
relating to the Business, the prepaid expenses set forth on Schedule 1.1; any
Claims arising after the Petition Date or the International Petition Date, as
applicable, in the ordinary course of business and relating to any of the
Purchased Assets or Assumed Liabilities; and any claims, demands, causes of
action, judgments and pending litigation (other than the Claims) as to which any
Seller is or could be a claimant, plaintiff, judgment creditor or beneficiary
arising after the Petition Date or the International Petition Date, as
applicable, in the ordinary course of business and relating to any of the
Purchased Assets or Assumed Liabilities; provided, however, that notwithstanding
the foregoing, the Purchased Assets shall not include any Excluded Assets.
"Purchased Real Property" shall mean all of the Sellers' right, title
and interest in and to the fee simple title to the Land described (including the
legal description) in Schedule 4.11(a) attached hereto and made a part hereof
and the Improvements thereon.
"Put Amount" shall mean the maximum amount that from time to time may
be put to the Buyer pursuant to the Put Obligation.
-17-
<PAGE>
"Put Obligation" shall mean the non-interest bearing obligation of the
Buyer, in substantially the form attached to Exhibit C.
"RCRA" -- See the definition of Hazardous Materials.
"Reciprocal Agreement" shall have the meaning ascribed thereto in the
Dundee Term Sheet.
"Redevelopment Agreement" shall mean that certain Block 36, North Loop
Project Redevelopment Agreement Oriental Theater, dated as of April 29, 1996,
made by and between the City of Chicago and Livent Chicago.
"Required Consents" shall mean the Consents to the Material Assumed
Contracts, whether pursuant to the U.S. Order, the Canadian Order or the
consent, authorization or waiver of the other party to such Contract.
"Reorganization Plan" shall mean the Plan of Reorganization to be filed
by the Sellers under Chapter 11 of the U.S. Bankruptcy Code.
"Rights Agreements" shall mean all contracts, agreements and other
undertakings by or for the benefit for any Seller relating, directly or
indirectly, to the Productions, whether they be rights of production,
presentation, license, development, or other ancillary or subsidiary rights, and
all option agreements, rights agreements, license agreements, merchandising
agreements, development agreements, and agreements providing for ancillary,
subsidiary or other rights in respect of such properties, and the Sellers'
limited partnership interests in The Jekyll Company Limited Partnership and The
Swan Lake Company Limited Partnership, New York limited partnerships; provided,
that "Rights Agreements" shall not include any Excluded Assets. All Rights
Agreements shall be separately identified and set forth in Schedules 4.14(a)(i)
and 4.14(a)(ii) attached hereto.
"Royalty Payment Release" shall mean (i) an order of the U.S.
Bankruptcy Court providing that in the event that Martin Bell is granted,
pursuant to the terms of the Non-Interference Agreement, an allowed
administrative claim against Livent and Livent (U.S.) equal to $350,000 (less
any amounts paid to Martin Bell pursuant to the terms of the Non-Interference
Agreement), Martin Bell shall not have an enforceable claim for or entitlement
to Royalty Payments (as used in the Non-Interference Agreement); (ii) a written,
unconditional and irrevocable waiver of entitlement to Royalty Payments executed
by Martin Bell; or (iii) the failure of the U.S. Bankruptcy Court to approve the
Non-Interference Agreement.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act.
"Sales and Ticket Orders" shall mean all of the Sellers' sales orders,
contracts or other commitments to purchasers of goods and services, including,
but not limited to, all ticket sales of the Business.
"SEC" shall mean the U.S. Securities and Exchange Commission.
-18-
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller Balance Sheet" -- See Section 4.7.
"Seller Material Adverse Effect" shall mean a material adverse effect
on the physical or financial condition or operations of the Business or the
Purchased Assets, as the case may be, taken as a whole or on the ability of the
parties hereto to consummate the transactions contemplated by the Transaction
Documents.
"Sellers" -- See the Preamble hereto.
"Sellers' Accounts" -- See Section 2.7(a).
"Sellers' Ticket Agents" shall mean any agent or other Person acting
for or on behalf of the Sellers engaged in the activity of selling tickets or
procuring Sales and Ticket Orders, including, without limitation, Ticketmaster,
Inc.
"Sellers' Transaction Documents" shall mean this Agreement, the
Exhibits and Schedules thereto and all other agreements, certificates or
documents delivered by the Sellers in connection with the consummation of the
transactions contemplated herein, including, without limitation, the Assignment
and Assumption Agreement, the Assignment of Lease, the Bills of Sale, the
Chicago Theater Deed, the Escrow Agreements and the Registration Rights
Agreement.
"Seussical" shall mean the musical play written by Lynn Ahrens and
Stephen Flaherty, based on the works of Dr. Seuss.
"Seussical Condition" shall be satisfied when the Sellers have obtained
and delivered to the Buyer (i) an agreement with the underlying rightsholder
(currently, the Seuss estate), on terms reasonably acceptable to the Buyer,
which approves the transfer of the underlying rights in and to Seussical to the
Buyer and extends the deadline to commence the production of Seussical no
earlier than December 1, 2000, (ii) agreements with Lynn Ahrens and Stephen
Flaherty, who together comprise the bookwriters, composer and lyricist of
Seussical, on terms reasonably acceptable to the Buyer, approving the transfer
of their Seussical rights to the Buyer and (iii) a certification by an executive
officer of Livent that, to the Sellers' knowledge, there are no defaults or
adverse claims under such agreements.
"Seussical Payment" -- See Section 2.2(a).
"Soil Shifting" -- See Section 9.8(a).
"Space Leases" shall mean all leases, licenses and other occupancy
agreements for space at the Premises under which one of the Sellers is the
lessor, licensor or grantor, as more particularly described in Schedule 4.11(d)
attached hereto.
"Structural Support Escrow Amount" -- See Section 9.8(c).
"Structural Support Work" -- See Section 9.8(b).
-19-
<PAGE>
"Support Work Documents" -- See Section 9.8(b).
"Taxes" shall mean for all purposes of this Agreement all taxes,
charges, fees, levies, deficiencies and/or other assessments, however
denominated, including, but not limited to, any interest, penalties or additions
to tax that may become payable in respect thereof, imposed by any Governmental
Authority, which taxes shall include all income taxes, payroll and employee
withholding taxes, unemployment insurance, employer health taxes, social
security, provincial and federal governmental pension plan taxes and payments,
sales and use taxes, goods and services taxes, excise taxes, franchise taxes,
capital gains taxes, gross receipts taxes, mortgage taxes, occupation taxes,
real and personal property taxes and assessments, stamp taxes, transfer taxes,
workmen's compensation taxes and other obligations of the same or a similar
nature, whether arising before, on or after the Closing; and "Tax" shall mean
any one of them.
"Tax Return" shall mean any return, declaration, report, information
return, claim for refund or credit or statement, including, without limitation,
any consolidated, combined or unitary return or other document (including any
related or supporting information), filed or required to be filed with any
Governmental Authority in connection with the determination, assessment,
collection, payment or refund of Taxes or the administration of any Laws or
administrative requirements relating to Taxes.
"Ticketmaster Receivables" shall mean accounts receivable relating to
Advance Ticket Sales by, or ticket rebates from, Ticketmaster, Inc.
"Title Commitment" -- See Section 9.1(a).
"Title Company" shall mean Chicago Title Insurance Company or another
reputable title insurance company.
"Title Defects" shall mean any mortgage, deed of trust, mechanic's,
materialman's, carrier's, worker's, repairer's, construction and similar lien,
statutory and other lien, pledge, security interest, lease, judgment, charge,
option, conditional sale agreement, right of first refusal, easement,
restrictive covenant, right of way, encroachment, encumbrance or survey defect
or any other instrument affecting the use, ownership, development, operation or
disposition of any Material Real Property that is recorded in the appropriate
recorder's office or, in the case of Material Real Property located in Canada,
registered against Livent in the sheriff's office in the county or district
where the Material Real Property is located, as applicable, in each case other
than Permitted Closing Liens.
"Transaction Documents" shall mean, collectively, the Buyer Transaction
Documents and the Sellers' Transaction Documents.
"Transaction Taxes" -- See Section 8.1.
"Transferred Employees" -- See Section 7.1(a).
"Union Employees" -- See Section 7.1(a).
-20-
<PAGE>
"Union Employment Agreements" -- See Section 7.1(a).
"U.S. Bankruptcy Cases" -- See the Recitals hereto.
"U.S. Bankruptcy Code" -- See the Recitals hereto.
"U.S. Bankruptcy Court" -- See the Recitals hereto.
"U.S. GAAP" -- See Section 5.7.
"U.S. Order" shall mean an order of the U.S. Bankruptcy Court obtained
in all material respects in the form attached hereto as Exhibit D, which form is
acceptable to Buyer, which, inter alia: (i) approves this Agreement and all
material terms and conditions hereof; (ii) provides that the Purchased Assets
are sold free and clear of all Liens pursuant to Sections 363 (b) and (f) of the
U.S. Bankruptcy Code, except to the extent of any Permitted Closing Liens; (iii)
provides that the Buyer is entitled to all of the protections of Section 363(m)
of the U.S. Bankruptcy Code as a good faith purchaser; (iv) provides for the
assumption and assignment by the Sellers to the Buyer of the Assumed Contracts;
(v) provides that the sale is exempt from transfer taxes to the fullest
permitted extent pursuant to Section 1146(c) of the U.S. Bankruptcy Code; and
(vi) provides that the Buyer shall be liable from and after the Closing solely
for all Assumed Liabilities but that the Buyer shall not be liable for any other
liabilities of the Sellers, including, without limitation, the Excluded
Liabilities.
"Violation" shall mean a condition that constitutes a violation of any
Law or Order regulating the ownership or leasing, as applicable, reconstruction,
repair, maintenance, operation or use of any of the Premises.
"Violation Notification" shall mean any written notification of a
Violation issued by a Governmental Authority or a Title Commitment (or the
written results of a municipal search) delivered by the Title Company to the
Sellers that references a Violation that is of record or filed in the office of
the applicable municipal department with respect to the applicable Material Real
Property and is not a Permitted Closing Lien.
"Warrants" -- See Section 2.9.
"Welfare Type Plans" -- See Section 7.3.
ARTICLE II.
PURCHASE AND SALE
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. (a) Subject to the
terms and conditions herein set forth, the Sellers shall sell, convey, transfer,
assign and deliver to the Buyer, or its designeees, and the Buyer shall purchase
and accept from the Sellers, on the Closing Date, all right, title and interest
of the Sellers in and to the Purchased Assets free and clear of all Liens other
than Permitted Closing Liens, wherever located.
-21-
<PAGE>
The Buyer expressly agrees and understands that the Sellers shall not
sell, convey, transfer, assign or deliver to the Buyer, and the Buyer shall not
purchase, any of the Excluded Assets.
SECTION 2.2. PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, in
consideration of the aforesaid sale, conveyance, transfer, assignment and
delivery of the Purchased Assets, the Buyer agrees to assume the Assumed
Liabilities and to pay to Livent U.S., as agent for the Sellers, (i) the amount
of $77,800,000 in cash (the "Initial Cash Amount"), subject to preliminary
adjustment at the Closing as provided in Section 2.3(b) on the basis of the
Estimated Closing Date Balance Sheet, and, as set forth in Sections 2.3(c),
2.3(d), 2.3(e), 2.3(f), 9.1(c), 9.1(d), 9.2, 9.3 and 9.6, and subject to final
adjustment after the Closing as provided in Section 2.4 on the basis of the
Closing Date Balance Sheet (as so adjusted, the "Adjusted Cash Purchase Price");
(ii) if the Seussical Condition is satisfied on or prior to the Closing Date,
the amount of $5,000,000 in cash (including if such payment is made pursuant to
Section 2.2(d) below, the "Seussical Payment"); (iii) the Put Obligation and
(iv) the Warrants as more particularly set forth in Section 2.7 (the Adjusted
Cash Purchase Price, the Seussical Payment, the Put Obligation, the Warrants and
the Assumed Liabilities are sometimes collectively referred to herein as, the
"Purchase Price").
(b) On the Closing Date, the Buyer shall pay to Livent U.S., as agent
for the Sellers, an amount (the "Estimated Purchase Price") equal to the Initial
Cash Amount, as adjusted pursuant to Sections 2.3(c), 2.3(d), 2.3(e), 2.3(f),
9.1(c), 9.1(d), 9.2, 9.3 and 9.6, plus, if the Seussical Condition has been
satisfied on or prior to the Closing Date, the amount of $5,000,000 in cash;
plus (i) the Estimated Price Increase (as defined in Section 2.3(b)), if any,
or, alternatively, less (ii) the Estimated Price Decrease (as defined in Section
2.3(b)), if any.
(c) Upon the determination of the Adjusted Cash Purchase Price, as
finally determined in accordance with Section 2.4,
(A) either (i) the Buyer shall pay to the Sellers the amount of the
Final Purchase Price Increase (as defined in Section 2.4(a)) or,
alternatively, (ii) the Sellers shall pay to the Buyer the amount of the
Final Purchase Price Decrease (as defined in Section 2.4(a)) in accordance
with the terms of this Agreement; and
(B) either (i) the Buyer shall pay to the Sellers the amount of the
Final Advance Ticket Sales Decrease (as defined in Section 2.4(b)) or,
alternatively, (ii) the Sellers shall pay to the Buyer the amount of the
Final Advance Ticket Sales Increase (as defined in Section 2.4(b)) in
accordance with the terms of this Agreement.
(d) If the Seussical Condition has not been satisfied on or prior to
the Closing Date but has been satisfied on or prior to February 1, 2000, the
Buyer, within five Business Days after the Sellers have notified the Buyer in
writing that the Seussical Condition has been satisfied and the Sellers have
provided Buyer with evidence, to the Buyer's reasonable satisfaction, that
-22-
<PAGE>
such condition has been satisfied, shall pay to Livent U.S., as agent for the
Sellers, the amount of $5,000,000 in cash.
SECTION 2.3. CLOSING PURCHASE PRICE ADJUSTMENTS.
(a) On the day which is five (5) Business Days prior to the Closing
Date, the Sellers shall deliver to the Buyer (i) a special purpose balance sheet
listing certain line items in substantially the form attached hereto as Schedule
2.3(a) (the "Estimated Closing Date Balance Sheet") based upon the Sellers'
books and records and prepared in accordance with GAAP applied on a consistent
basis with prior periods as restated in a manner consistent with the Seller
Balance Sheet, and the amounts thereof, to be included on the Closing Date
Balance Sheet and (ii) a certificate of the Sellers, duly executed by the chief
financial officer of Livent, stating that the Estimated Closing Date Balance
Sheet has been prepared in good faith, has been prepared in accordance with GAAP
applied on a consistent basis with prior periods as restated in a manner
consistent with the Seller Balance Sheet, and reflects the Sellers' best
estimate of, and to the best knowledge of the Sellers, fairly presents each of
the items, and the amounts thereof, to be included on the Closing Date Balance
Sheet.
(b) If the amount (the "Net Amount") of the aggregate assets less the
aggregate liabilities listed under "Pro Forma Net Working Capital Adjustment"
shown on the Estimated Closing Date Balance Sheet, is greater than the Net
Amount with respect to the corresponding line items shown on the Seller Balance
Sheet, the payment of the Initial Cash Amount to the Sellers on the Closing Date
shall be increased, as a preliminary adjustment to the Initial Cash Amount, as
provided in Section 2.2(b), by the amount of such excess (the "Estimated Price
Increase"). If the Net Amount as shown on the Estimated Closing Date Balance
Sheet is less than the Net Amount with respect to the corresponding line items
shown on the Seller Balance Sheet, the payment of the Initial Cash Amount to the
Sellers on the Closing Date shall be decreased, as a preliminary adjustment to
the Initial Cash Amount, as provided in Section 2.2(b), by the amount of such
deficiency (the "Estimated Price Decrease").
(c) At the Closing, the Sellers shall deliver (i) a statement setting
forth, as of the date five (5) Business Days prior to the Closing Date (the
"Pre-Closing Date"), all Advance Ticket Sales, and an accounting of all ticket
liabilities and all proceeds received through said Pre-Closing Date by the
Sellers and Sellers' Ticket Agents (the "Pre-Closing Advance Ticket Sales
Statement") and (ii) a certificate of the Sellers, duly executed by the chief
financial officer of Livent, stating that the Pre-Closing Advance Ticket Sales
Statement has been prepared in good faith, and reflects the Sellers' best
estimate of the Advance Ticket Sales as of the Pre-Closing Date. The amount set
forth in the Pre-Closing Advance Ticket Sales Statement for ticket liabilities
in respect of Advance Ticket Sales shall be a deduction from the Initial Cash
Amount.
(d) If, at the Closing, the Pantages Theater shall be subject to or
otherwise affected by the Pantages Ticket Surcharge, $1.6 million shall be
deducted from the Initial Cash Amount. If, at the Closing, (i) the New York
Theater shall be subject to the New York Fixture Lien or (ii) the Sellers
otherwise assume and assign to the Buyer the New York Fixture Lien as a true
lease pursuant to Section 365 of the U.S. Bankruptcy Code, $3.1 million shall be
deducted
-23-
<PAGE>
from the Initial Cash Amount. If, at the Closing, Livent has not obtained the
Royalty Payment Release, $200,000 shall be deducted from the Initial Cash
Amount.
(e) Within five (5) days prior to the Closing, the Sellers shall
deliver to the Buyer a schedule ("Schedule of Capital and Pre-Production
Expenditures") which shall list the amounts the Sellers have spent since the
Balance Sheet Date (and estimated through the Closing Date) on capital
expenditures (up to a maximum amount of $250,000) and on Pre-Production
Expenditures made from and after May 23, 1999 (up to the maximum amount per show
listed on Schedule 2.3(e)). The aggregate of such amounts shall be an addition
to the Initial Cash Amount and shall constitute part of the Purchase Price. The
Schedule of Capital and Pre-Production Expenditures shall be delivered with a
certification, duly executed by a senior financial officer of Livent, which
certification shall constitute a representation and warranty under this
Agreement, that the information contained thereon reflects the Sellers' best
estimate of such capital and pre-production expenditures.
(f) The amount of Pre-Closing Losses (as defined below), if any, shall
be a deduction from the Initial Cash Amount. "Pre-Closing Losses" shall mean
Losses that, if identified after the Closing, would be indemnified by the
Sellers pursuant to Section 11.2 (but only (i) to the extent such Losses exceed,
in the aggregate, $250,000, as provided in Section 11.2 and (ii) up to a maximum
amount of $2,000,000), the amount of which Losses have been resolved in good
faith between the Buyer and the Sellers (or otherwise in accordance with the
terms of this Agreement) prior to the Closing.
SECTION 2.4. POST-CLOSING PURCHASE PRICE ADJUSTMENTS.
(a) Within twenty (20) days following the Closing Date, the Buyer shall
deliver to the Sellers a special purpose balance sheet with respect to those
lines items included on the Estimated Closing Date Balance Sheet as of the close
of business on the Adjustment Date prepared by the Buyer (the "Closing Date
Balance Sheet"). The Closing Date Balance Sheet shall be prepared in accordance
with GAAP, applied on a consistent basis with prior periods as restated in a
manner consistent with the Seller Balance Sheet, shall also include a separate
line item setting forth all ticket liabilities in respect of Advance Ticket
Sales and shall set forth the calculation of the Net Amount in a manner
consistent with the calculation thereof on the Seller Balance Sheet and the
Estimated Closing Date Balance Sheet as of the Closing Date. If the Net Amount,
as reflected in the Closing Date Balance Sheet, is greater than the Net Amount,
as reflected in the Estimated Closing Date Balance Sheet, the Estimated Purchase
Price shall be increased, by a final adjustment to the Estimated Purchase Price
as provided in Section 2.2(c), by the amount of such excess (the "Final Purchase
Price Increase"). If the Net Amount as reflected in the Closing Date Balance
Sheet is less than the Net Amount as reflected in the Estimated Closing Date
Balance Sheet, the Estimated Purchase Price shall be decreased, by a final
adjustment to the Estimated Purchase Price as provided in Section 2.2(c), by the
amount of such deficiency (the "Final Purchase Price Decrease").
(b) Within fifteen (15) days after the Closing, the Buyer shall prepare
and deliver to the Sellers a statement, duly executed by a senior financial
officer of the Buyer, setting forth, for the period after the Pre-Closing Date
and running through the close of business on the
-24-
<PAGE>
Adjustment Date, all Advance Ticket Sales, and an accounting of all ticket
liabilities and proceeds received in respect thereof by the Sellers and Sellers'
Ticket Agents (the "Post-Closing Advance Ticket Sales Statement"). If the ticket
liabilities for Advance Ticket Sales, as reflected in the Pre-Closing Date
Advance Ticket Statement, is greater than the ticket liabilities for Advance
Ticket Sales, as reflected in the Post-Closing Advance Ticket Sales Statement,
the Estimated Purchase Price shall be increased, by an adjustment to the
Estimated Purchase Price as provided in Section 2.2(c), by the amount of such
excess (the "Final Advance Ticket Sales Decrease"). If the ticket liabilities
for Advance Ticket Sales, as reflected in the Pre-Closing Advance Sales Ticket
Statement, is less than the ticket liabilities for Advance Ticket Sales, as
reflected in the Post-Closing Advance Ticket Sales Statement, the Estimated
Purchase Price shall be decreased, by an adjustment to the Estimated Purchase
Price as provided in Section 2.2(c), by the amount of such deficiency (the
"Final Advance Ticket Sales Increase").
(c) The Sellers shall have fifteen (15) days after receipt of the
Closing Date Balance Sheet and related supporting documentation (the "Dispute
Period") to dispute any item, calculation or amount, in the Closing Date Balance
Sheet (a "Dispute"). If the Sellers do not give written notice of a Dispute (a
"Dispute Notice") to the Buyer within the Dispute Period, the Closing Date
Balance Sheet shall be deemed to have been irrevocably accepted by the Sellers
in the form in which it was delivered by the Buyer and not subject to further
challenge. In the event that the Sellers do not agree with any item, calculation
or amount, reflected on the Closing Date Balance Sheet, the Sellers shall give
the Buyer a Dispute Notice within the Dispute Period, setting forth the basis of
any disagreement, and the Sellers and the Buyer shall, within ten (10) days
after receipt by the Buyer of such Dispute Notice, attempt to resolve such
Dispute and agree in writing upon the final Closing Date Balance Sheet. In the
event that the Sellers and the Buyer are unable to resolve any such Dispute
within the ten (10) day resolution period, then the certified public accounting
firm of Arthur Andersen LLP or such other national office of a certified public
accounting firm as may be mutually agreed upon by the Sellers and the Buyer (the
"Arbitrator") shall be employed as arbitrator hereunder to settle such Dispute
as soon as reasonably practicable. The parties agree that the Arbitrator shall
decide only the matters involved in the Dispute, and not any other matters. Any
arbitration pursuant to this Section 2.4(c) shall be conducted in New York, New
York in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then existing and the Arbitrator's determination with
respect to any Dispute shall be final and binding on all parties and not subject
to appeal or review (judicial or otherwise) on any ground, and judgment on the
arbitration award may be enforced in any court having jurisdiction over the
subject matter of the controversy. The Sellers and the Buyer shall each pay
one-half of the fees and expenses of the Arbitrator for the services of the
Arbitrator in the arbitration.
(d) In the event of a permitted purchase price adjustment pursuant to
this Section 2.4 (each, a "Purchase Price Adjustment"), an amount equal to the
Purchase Price Adjustment together with interest on such amount at a rate equal
to the "prime rate" of interest as published in the Wall Street Journal from
time to time, from the Closing Date to the payment date, shall be paid in
accordance with the provisions of this Agreement and the Escrow Agreements.
-25-
<PAGE>
SECTION 2.5. ASSUMPTION OF LIABILITIES. From and after the Closing, the
Buyer shall assume and the Buyer hereby agrees to pay, perform and discharge
when due, the following liabilities of the Sellers (the "Assumed Liabilities"):
(a) all Liabilities of any of the Sellers shown or reflected in the
Seller Balance Sheet which directly relate to the Purchased Assets and remain
unpaid at the time of Closing, other than Liabilities arising (i) prior to the
Petition Date or the International Petition Date, as applicable, or (ii) under
the Credit Agreement;
(b) all Liabilities of any of the Sellers directly relating to the
Business and arising in the ordinary course of business (i) on or after the
Balance Sheet Date until the date hereof or (ii) on or after the date hereof to
the extent permitted by Section 6.1;
(c) all Liabilities of any of the Sellers accruing or arising under any
of the Assumed Contracts from and after the Closing Date, except for Liabilities
of the Sellers with respect to Union Employees and Assumed Collective Bargaining
Agreements, which are provided for in Sections 2.5(d) and (e) below;
(d) all Liabilities of the Sellers with respect to Union Employees to
the extent expressly provided in Article VII;
(e) all Liabilities of the Sellers under the Assumed Collective
Bargaining Agreements to the extent expressly provided in Article VII;
(f) all Liabilities of any of the Sellers arising under the Permitted
Closing Liens;
(g) all Liabilities of the Sellers relating to Advance Ticket Sales to
the extent set forth on the Post-Closing Advance Ticket Sales Statement,
regardless of when such Liabilities arose; and
(h) all other Liabilities arising on or after the Closing Date with
respect to the operation of the Business from and after the Closing Date.
Notwithstanding the preceding clauses, Assumed Liabilities shall not include (i)
Taxes imposed on or based on income, revenue or gross receipts (including, but
not limited to, corporate franchise taxes based on income, revenues or gross
receipts), sales, use, value-added importations of property and services,
payroll and employee withholding for periods ending prior to the Closing Date
(other than charges based on ticket sales including, without limitation, Project
Support Payments (as defined in the New York Sublease) and amounts payable
pursuant to Section 7.2 of the Redevelopment Agreement, each, as adjusted
pursuant to the Closing Date Balance Sheet), (ii) all Liabilities with respect
to the Excluded Assets and (iii) all Liabilities under Environmental Laws and
Environmental Claims, and all such Liabilities shall constitute Excluded
Liabilities as defined below. All the Liabilities and obligations of the Sellers
of whatever kind or nature, known or unknown, fixed or contingent, accrued or
unaccrued, other than the Assumed Liabilities, are hereinafter referred to as
the "Excluded Liabilities." Without limiting the second preceding sentence, the
Buyer shall not assume or pay, perform, discharge or
-26-
<PAGE>
be responsible for any of the Excluded Liabilities. The provisions of this
Section 2.5 shall survive the Closing.
SECTION 2.6. DEPOSIT. On the date hereof, the Buyer has executed and
delivered to the Sellers the Deposit Escrow Agreement and deposited with the
Deposit Escrow Agent under that Agreement $2,250,000 in cash (the "Deposit").
The Deposit, together with any interest thereon, shall be held and disbursed
pursuant to the terms of the Deposit Escrow Agreement and this Agreement.
SECTION 2.7. PAYMENT OF PURCHASE PRICE. In payment for the Purchased
Assets, on the Closing Date:
(a) The Deposit Escrow Agent shall pay to Livent U.S., as agent for the
Sellers, in accordance with the terms of the Deposit Escrow Agreement, the
Deposit by wire transfer of immediately available funds to one or more bank
accounts designated by Livent U.S. in writing to the Buyer, which designation
shall be made not less than two Business Days before the Closing Date (the
"Sellers' Accounts");
(b) The Buyer shall pay to Livent U.S., as agent for the Sellers, the
Estimated Purchase Price less the amounts paid pursuant to clause (a) above and
less the amounts paid pursuant to clauses (c), (d), (e) and (f) below, by wire
transfer of immediately available funds to the Sellers' Accounts;
(c) At the Closing, the Buyer shall cause $2,000,000 out of the
Estimated Purchase Price to be paid to the Escrow Agent pursuant to the Escrow A
Agreement. Said funds, together with any interest thereon shall be referred to
as the "Escrow A Funds." Subject to Section 11.1, the Escrow A Funds shall be
available, for a period of sixty (60) days from the Closing Date, to satisfy:
(i) Indemnification Claims made by the Buyer pursuant to Section 11.2(a) hereof,
(ii) Purchase Price Adjustments pursuant to Section 2.4(a) hereof, and (iii)
such other claims that the Buyer may have hereunder. Upon the termination of the
Escrow A Agreement sixty (60) days after the Closing Date, all Escrow A Funds
which have not been paid to the Buyer and are not subject to a claim or demand
by the Buyer in accordance with this Agreement and the Escrow A Agreement shall
be paid by the Escrow Agent to the Sellers' Accounts, by wire transfer of
immediately available funds;
(d) At the Closing, the Buyer shall cause up to $2,000,000 (at its
option, by written notice to the Sellers' three Business Days prior to Closing,
based on its reasonable review of available documents related to the estimate of
the Advance Ticket Sales liability) out of the Estimated Purchase Price to be
paid to the Escrow Agent pursuant to the Escrow B Agreement. Said funds,
together with any interest thereon, shall be referred to as the "Escrow B
Funds." The Escrow B Funds shall be available, for a period of thirty (30) days
from the Closing Date, to satisfy claims made by the Buyer in respect of
adjustments respecting Advance Ticket Sales, as more particularly set forth in
Section 2.4(b) and in the Escrow B Agreement. The Buyer shall be entitled to
draw against the Escrow B Funds, pursuant to the Escrow B Agreement, an amount
equal to the Final Advance Ticket Sales Increase, if any. Upon termination of
the Escrow B Agreement thirty (30) days after the Closing Date, all Escrow B
Funds which have not been
-27-
<PAGE>
drawn or subject to a claim or demand by the Buyer shall be paid by the Escrow
Agent to Sellers' Accounts, by wire transfer in immediately available funds;
(e) At the Closing, the Buyer shall cause $300,000 out of the Estimated
Purchase Price to be paid to the Escrow Agent pursuant to the Escrow C
Agreement. Said funds, together with any interest thereon shall be referred to
as the "Escrow C Funds." The Escrow C Funds shall be available to satisfy the
Pantages Naming Shortfall until the end of the Pantages Naming Period. The
balance, if any, of the Pantages Naming Shortfall shall be satisfied after the
end of the Pantages Naming Period by offsetting the Pantages Naming Shortfall
against the Put Amount, with the amount of such Pantages Naming Shortfall
offsetting the Put Amount to be valued by increasing such Pantages Naming
Shortfall from the end of the Pantages Naming Period to the fifth anniversary of
the Closing Date using an annual rate of 15%. The Buyer shall notify the Sellers
as to any such offset against the Put Amount within ten (10) Business Days
following the end of the Pantages Naming Period. Such notification shall be
accompanied by a certification of a senior financial officer of the Buyer as to
the calculation of such offset, including related supporting detail. Upon the
termination of the Escrow C Agreement at the end of the Pantages Naming Period,
all Escrow C Funds which have not been paid to the Buyer and are not subject to
a claim or demand by the Buyer in accordance with this Agreement and the Escrow
C Agreement shall be paid by the Escrow Agent to the Sellers' Accounts, by wire
transfer of immediately available funds; and
(f) At the Closing, if the Structural Support Work is not completed
prior to the such time, the Buyer shall cause funds in the amount of the
Structural Support Escrow Amount as determined pursuant to Section 9.8 to be
paid out of the Estimated Purchase Price to the Escrow Agent pursuant to the
Escrow D Agreement. Said funds, together with any interest thereon, shall be
referred to as the "Escrow D Funds." The Escrow D Funds shall be available until
the completion of the Structural Support Work. The Buyer shall be entitled to
draw against the Escrow D Funds, pursuant to the Escrow D Agreement, to pay
amounts required to complete the Structural Support Work. The Buyer may offset
any additional amounts required to complete the Structural Support Work against
the Put Amount, with the amount of such additional amounts offsetting the Put
Amount to be valued by increasing such additional amounts from the date of their
incurrence to the fifth anniversary of the Closing Date using an annual rate of
15%. The Buyer shall notify the Sellers as to any such offset against the Put
Amount ten (10) Business Days prior to any such offset. Such notification shall
be accompanied by a certification of a senior financial officer of the Buyer as
to the calculation of such offset, including related supporting detail and
reasonable third party documentation evidencing the Buyer's incurrence of the
costs in question (or, in the case of the final offset, reasonable third party
documentation evidencing costs incurred or that will be incurred to complete the
Structural Support Work). No such offset shall be made after the last day of the
month in which the twelve (12) month anniversary of the Closing Date occurs.
Upon termination of the Escrow D Agreement, all Escrow D Funds which have not
been drawn or subject to a claim or demand by the Buyer in accordance with this
Agreement and the Escrow D Agreement shall be paid by the Escrow Agent to
Sellers' Accounts, by wire transfer in immediately available funds;
-28-
<PAGE>
(g) The Buyer shall deliver to the Sellers certificates representing
the aggregate amount of the Warrants, allocated among the Sellers pursuant to
written instructions provided to the Buyer not less than three (3) Business Days
before the Closing Date.
SECTION 2.8. ALLOCATION OF PURCHASE PRICE. The Purchase Price will be
allocated among the Purchased Assets and the Assumed Liabilities for tax
purposes only in accordance with an allocation schedule prepared by the Buyer no
later than 180 days after the Closing Date, which allocation shall be binding
for tax purposes on the Sellers. The allocation set forth on such allocation
schedule shall be reasonable and consistent with the requirements of applicable
Law. The Buyer and the Sellers will make any and all filings with any taxing
authorities consistent with such allocation. Such allocation of the Purchase
Price will not be binding in the Bankruptcy Cases upon the Sellers' creditors or
other parties in interest and will not have precedential value with respect to
any allocations of value contained in a plan or plans under chapter 11 of the
U.S. Bankruptcy Code or the CCAA involving the Sellers.
SECTION 2.9. WARRANTS.
(a) Subject to the terms and conditions of this Agreement, the Buyer
shall issue at the Closing to Livent U.S., as agent for the Sellers, warrants to
purchase the number of shares of Common Stock set forth below at the below
exercise price (collectively, the "Warrants"), in substantially the form
attached hereto as Exhibit E (with the modifications for the respective Series
indicated on such Exhibit):
Series Shares of Common Stock Exercise Price Per Share
------ ---------------------- ------------------------
A 50,000 $120
B 50,000 $140
C 100,000 $150
D 200,000 $160
E 200,000 $200
(b) The Sellers agree that any distribution of the Warrants will be
only to the creditors and equity security holders of the Sellers after
confirmation of, and as part of and in accordance with, the Reorganization Plan
for claims against, and interests in, the Sellers. If the No Action Letter is
not issued prior to the confirmation of the Reorganization Plan, the Warrants
will only be distributed pursuant to an effective and current Warrant
Distribution Registration Statement (as defined in the Registration Rights
Agreement to be entered into pursuant to Section 3.2) or upon receipt of an
opinion of counsel to the Sellers, reasonably acceptable to the Buyer, that an
exemption from the registration requirements of the Securities Act will be
available with respect to such distribution of the Warrants, the exercise of the
Warrants by transferees of the Warrants and any sale of Common Stock issued upon
exercise of the Warrants.
-29-
<PAGE>
ARTICLE III.
CLOSING
SECTION 3.1. CLOSING. The closing hereunder (the "Closing") shall take
place at the offices of Willkie Farr & Gallagher at 787 Seventh Avenue, New
York, New York 10019 at 10:00 a.m. on the third Business Day following the
satisfaction or waiver by the appropriate party of all the conditions contained
in Articles XII and XIII hereof, or on such other date and at such other place
and time as may be mutually agreed to by the parties hereto (the "Closing
Date").
SECTION 3.2. CLOSING DELIVERIES OF THE SELLERS. At the Closing and
subject to the terms and conditions contained herein, the Sellers shall deliver
or cause to be delivered to the Buyer the following:
(a) the Assignment and Assumption Agreement, duly executed by the
Sellers;
(b) each of the Escrow A Agreement, the Escrow B Agreement, the Escrow
C Agreement and the Escrow D Agreement, duly executed by the Sellers;
(c) FIRPTA Certificates, duly executed by each of Livent U.S., Livent
N.Y. and Livent Chicago;
(d) duly executed bill of sales, in form and substance reasonably
satisfactory to the Sellers and the Buyer;
(e) with respect to the Chicago Theater, a warranty deed without
covenant in recordable form, substantially the form attached hereto as Exhibit F
(the "Chicago Theater Deed"), duly executed by Livent Chicago;
(f) with respect to the Canadian Leases, an assignment of such leases
(the "Canadian Leases Assignment"), in form and substance reasonably
satisfactory to the Sellers and the Buyer, duly executed by Livent;
(g) with respect to the New York Sublease and all subordination,
nondisturbance and attornment agreements or recognition agreements with respect
thereto, an Assignment and Assumption of Leases in recordable form, in form and
substance reasonably satisfactory to the Sellers and the Buyer, (the "Assignment
of Leases"), duly executed by Livent N.Y.;
(h) such Seller closing certificates as required under Article XIII
hereof;
(i) the Registration Rights Agreement, substantially in the form of
Exhibit G attached hereto, duly executed by the Sellers;
(j) transfer tax forms which have been duly completed and executed by
the Sellers to the extent applicable;
-30-
<PAGE>
(k) Livent N.Y. shall deliver a seller certification substantially in
the form of Exhibit H-1, Livent Chicago shall deliver a seller certification
substantially in the form of Exhibit H-2 and Livent shall deliver a seller
certification substantially in the form of Exhibit H-3, in each case, with such
changes thereto, if any, as shall be necessary in order for the statements and
certifications contained therein to be true and correct as of the Closing
(without affecting the parties' respective rights and obligations under Section
9.1 hereof);
(l) to the extent in Sellers' possession, plans and specifications, if
any, relating to the Material Real Property;
(m) keys to the Premises;
(n) any further Sellers' deliveries as identified in Section 13.12
hereof;
(o) an incumbency certificate for each Seller;
(p) a release and satisfaction of broker's lien substantially in the
form of Exhibit I hereto, duly executed by SG Cowen Securities Corporation;
(q) the Dundee Agreement, duly executed by Livent;
(r) a release of the Reciprocal Agreement, in registrable form, duly
executed by Livent (the "Release of Reciprocal Agreement"); and
(s) such other deliveries Sellers shall be required to make on the
Closing Date pursuant to any other provisions of this Agreement.
SECTION 3.3. CLOSING DELIVERIES OF THE BUYER. At the Closing and
subject to the terms and conditions contained herein, the Buyer shall deliver or
cause to be delivered to the Sellers the following:
(a) the Assignment and Assumption Agreement, duly executed by the
Buyer,
(b) each of the Escrow A Agreement, the Escrow B Agreement, the Escrow
C Agreement and the Escrow D Agreement, duly executed by the Buyer;
(c) the Put Obligation, duly executed by the Buyer;
(d) the warrant agreements for the Warrants, substantially in the form
of Exhibit E attached hereto, duly executed by the Buyer;
(e) Canadian Leases Assignment, duly executed by the Buyer;
(f) such Buyer closing certificates as required under Article XII
hereof;
(g) the Registration Rights Agreement, substantially in the form of
Exhibit G attached hereto, duly executed by the Buyer;
-31-
<PAGE>
(h) transfer tax forms which have been duly completed and executed by
the Buyer to the extent applicable;
(i) the Dundee Agreement, duly executed by Buyer; and
(j) such other deliveries the Buyer shall be required to make on the
Closing Date pursuant to any other provisions of this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby represent and warrant to the Buyer as follows:
SECTION 4.1. CORPORATE ORGANIZATION. Each of the Sellers is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, other than as may be affected by the
Bankruptcy Cases. Subject to any necessary authority from the U.S. Bankruptcy
Court or the Canadian Bankruptcy Court, each of the Sellers has all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its businesses as now conducted.
SECTION 4.2. QUALIFICATION TO DO BUSINESS. Schedule 4.2 sets forth each
jurisdiction in which each of the Sellers is qualified, licensed or registered
to carry on business.
SECTION 4.3. AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of the
Sellers has all requisite corporate power and authority to enter into the
Sellers' Transaction Documents and, subject to the U.S. Bankruptcy Court's entry
of the U.S. Order, and the Canadian Bankruptcy Court's entry of the Canadian
Order, to carry out its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery of the Sellers'
Transaction Documents, the performance of each Seller's obligations thereunder
and the consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action by the Board of Directors of such
Seller, and, subject to the U.S. Bankruptcy Court's entry of the U.S. Order, and
the Canadian Bankruptcy Court's entry of the Canadian Order, no other corporate
proceedings (including, without limitation, shareholder proceedings) on the part
of such Seller are necessary to authorize such execution, delivery and
performance and the consummation of the transactions contemplated thereby. This
Agreement and the Deposit Escrow Agreement have been duly executed by each of
the Sellers and, subject to the U.S. Bankruptcy Court's entry of the U.S. Order
and the Canadian Bankruptcy Court's entry of the Canadian Order, constitute such
Seller's valid and binding obligations, enforceable against such Seller in
accordance with their terms.
SECTION 4.4. NO CONFLICT OR VIOLATION. Subject to (i) the receipt of
all Consents set forth on Schedule 4.5, and (ii) the U.S. Bankruptcy Court's
entry of the U.S. Order and the Canadian Bankruptcy Court's entry of the
Canadian Order, the execution, delivery and performance by each of the Sellers
of the Sellers' Transaction Documents and the consummation of the transactions
contemplated thereby do not and will not: (A) violate or conflict with any
provision of the Certificate or Articles of Incorporation or By-laws (or
equivalent documents) of
-32-
<PAGE>
such Seller; (B) violate any provision of material law, statute, rule,
regulation or ordinance of any Governmental Authority (each, a "Law") or any
material Order applicable to such Seller or to any of the Purchased Assets; or
(C) violate, or result in a breach of any condition or provision of, or
constitute a default or event of default which, with or without due notice or
lapse of time or both would constitute a default) under or create or give rise
to any adverse right of termination or cancellation by, or excuse the
performance by a party under, in each case, in any material respect, any Assumed
Contract; or (D) result in the creation or imposition of any Liens on the
Purchased Assets other than Permitted Closing Liens.
SECTION 4.5. CONSENTS. Subject to the U.S. Bankruptcy Court's entry of
the U.S. Order and the Canadian Bankruptcy Court's entry of the Canadian Order,
Schedule 4.5 sets forth a true and complete list of each Consent of any
Governmental Authority, domestic or foreign, or of any other Person, including,
without limitation, all Consents in connection with the Assumed Contracts, and
each declaration to or filing or registration with any such Governmental
Authority that is required in connection with the execution and delivery of the
Sellers' Transaction Documents by the Sellers, the performance by the Sellers of
their respective obligations thereunder or the consummation of the transactions
contemplated thereby.
SECTION 4.6. COMPLIANCE WITH LAW. Except as set forth in Schedule 4.6
or in connection with the Bankruptcy Cases, the Sellers have not received
written notice of any violation of any Law, and, to the Knowledge of the
Sellers, have conducted the Business in compliance with all material Laws and
are not in default with respect to any Order of any national, state or local
court or Governmental Authority or arbitrator, domestic or foreign, applicable
to the Purchased Assets, the Business or the Assumed Liabilities.
SECTION 4.7. FINANCIAL STATEMENTS. The Sellers have delivered to the
Buyer the following financial statements and information: (i) the amended and
restated audited consolidated and consolidating balance sheets of Livent and its
subsidiaries as at December 31, 1997 and the related audited amended and
restated consolidated and consolidating statements of income, stockholders'
equity and cash flows of Livent and its subsidiaries for the fiscal year then
ended, together with all reconciliation statements prepared in connection
therewith, the notes thereto and the reports thereto of Deloitte & Touche, the
Sellers' independent certified public accountants, (ii) unaudited consolidated
and consolidating balance sheets of Livent and its subsidiaries for the fiscal
quarter ended September 30, 1998 and the related statements of income,
stockholders' equity and cash flows for such quarter and the nine months ended
September 30, 1998, and (iii) all historical consolidated and consolidating
financial statements heretofore delivered by the Sellers to SG Cowen Securities
Corporation, including, without limitation, all financial statements included in
the Confidential Information Package, dated January 1999 prepared by SG Cowen
Securities Corporation (the "Information Package"). All such consolidated
statements were prepared in conformity with GAAP and fairly present the
financial position (on a consolidated basis) of the entities described in such
financial statements as at the respective dates thereof and the results of
operations and cash flows (on a consolidated basis) of the entities described
therein for each of the periods then ended, subject, in the case of any such
unaudited financial statements, to changes resulting from audit and normal
year-end adjustments. The Sellers have also heretofore delivered to the Buyer
the special purpose consolidated balance sheet of Livent and its subsidiaries
(together with the schedules thereto, the
-33-
<PAGE>
"Seller Balance Sheet") as at February 28, 1999 (the "Balance Sheet Date"),
which is attached hereto as Schedule 4.7. The Seller Balance Sheet fairly
presents, in all material respects, the individual financial statement elements
relating to the Purchased Assets and the Assumed Liabilities as at the date
thereof in accordance with GAAP consistently applied and consistent with prior
periods as restated, subject to changes resulting from audit and normal year-end
adjustments.
SECTION 4.8. LITIGATION. Except as set forth in Schedule 4.8 or in
connection with the Bankruptcy Cases, there are no actions, lawsuits, claims,
complaints, charges, arbitrations, grievances, mediations, suits, administrative
or other proceedings, disputes or investigations (collectively, "Proceedings")
pending or, to the Knowledge of the Sellers, threatened, against or affecting
the Business or any of the Purchased Assets or Assumed Liabilities, whether
domestic or foreign. Except in connection with the Bankruptcy Cases, to the
Knowledge of the Sellers, neither the Business nor any of the Purchased Assets
is subject to any Order entered in any Proceeding. None of the items listed on
Schedule 4.8 would reasonably be expected to have individually or in the
aggregate, a Seller Material Adverse Effect.
SECTION 4.9. LABOR RELATIONS. Except as set forth on Schedule 4.9, none
of the Sellers is a party to any collective bargaining agreement, the Sellers
have not separately or collectively made any other commitments, assurances or
promises to any Union Employee or any labor organizations that would materially
affect the Buyer's rights, obligations or liabilities under any Assumed
Collective Bargaining Agreements, and each of the Sellers is in compliance with
all Laws affecting employment and employment practices, including, but not
limited to, statutory and common law obligations concerning terms and conditions
of employment, discrimination (including harassment or retaliation), hiring,
notice of plant closing and/or mass layoffs, terminations of employment and
labor relations, paid or unpaid leaves of absences, wages and hours. Except as
set forth on Schedule 4.8 or Schedule 4.9, there are no unfair labor practices
or other Proceedings pending or, to the Knowledge of the Sellers, threatened,
between any of the Sellers and any of their current or former employees or any
labor, organization, collective bargaining representative or other collective
bargaining unit representing any current or former employee of the Sellers.
SECTION 4.10. EMPLOYEE BENEFITS. Schedule 4.10 lists all Employee
Benefit Plans and all Canadian Pension/Benefit Plans, any executive compensation
arrangements, excess benefit plans or supplemental pension plans, change in
control agreements or severance plans or arrangements (other than multiemployer
pension or welfare benefit plans maintained or contributed to pursuant to
collective bargaining agreements), that any of the Sellers maintain, have
entered into, or to which any of the Sellers contribute for the benefit of any
Employee or to which any of the Sellers may have any Liabilities.
SECTION 4.11. PURCHASED REAL PROPERTY.
(a) The applicable Sellers have good and marketable title to their
respective Purchased Real Property, free and clear of all Liens other than
Permitted Liens. The applicable Sellers, as of the Closing Date, will have good
and marketable title to their respective Purchased Real Property, free and clear
of all Liens other than Permitted Closing Liens.
-34-
<PAGE>
(b) Except as set forth in Schedule 4.11(b), no Seller has received
written notice of any default or breach by it under any of the covenants,
conditions, restrictions, easements, rights-of-way or agreements set forth on
Schedule 1.8(b) hereto which remains uncured, and to the Knowledge of the
Sellers, except as set forth in Schedule 4.11(b), no such default or breach now
exists.
(c) Schedule 4.11(c) contains a true, correct and complete list of all
the leases or other occupancy agreements under which any of the Sellers uses or
occupies or has the right to use or occupy, any of the Leased Real Property. The
Sellers have heretofore delivered to the Buyer true, complete and correct copies
of all Leases including any amendments thereto. Except as set forth in Schedule
4.11(c) (and, in the case of the New York Theater, assuming the Master Lease is
in full force and effect (which Master Lease, to the Sellers' Knowledge, is in
full force and effect)), each Lease is in full force and effect, all rent and
other sums and charges payable by the Sellers thereunder are current, no written
notice of default or termination under any Lease is outstanding, no Proceeding
has been instituted by any lessor against a Seller under any Lease, and no
default or conditional limitation which has remained uncured beyond applicable
cure periods on the part of any of the Sellers exists under any Lease. No
Affiliate of any of the Sellers is the lessor under any Lease. Except to the
extent set forth in Schedule 4.11(c), none of the Leases have been amended,
modified or extended as of the date hereof.
(d) Schedule 4.11(d) contains a true, correct and complete list of all
Space Leases under which any tenant, subtenant or licensee has a right to occupy
or use any of the Premises. The Sellers have heretofore delivered to the Buyer a
true, complete and correct copy of all Space Leases. Each Space Lease is in full
force and effect and all rent and other charges payable to Seller thereunder are
current. Except as set forth on Schedule 4.11(d), there are (i) no leasing
commissions due or payable or which become payable under the terms of any Space
Lease, and (ii) no outstanding claims for tenant improvement work to be
performed or paid for in respect of any such Space Lease which remains uncured.
Except as set forth on Schedule 4.11(d), the Sellers are not in default of any
obligations under any Space Lease and, to the Sellers' Knowledge, no other party
is in default under any of the Space Leases. Except to the extent set forth in
Schedule 4.11(d), none of the Space Leases have been amended, modified or
extended as of the date hereof.
(e) Except as set forth on Schedule 4.11(e), to the Sellers' Knowledge
there are no outstanding purchase options, rights of first refusal or rights of
reverter relating to the Purchased Real Property or any interests therein.
Except to the extent relating to Permitted Liens of the type described in clause
(ii) of the definition thereof or as otherwise set forth on Schedule 4.11(e),
the Sellers owe no monies to any contractor, subcontractor or materialman for
labor or materials performed, rendered or supplied in connection with the
Premises for which such person could claim or has claimed a Lien against any of
the Premises.
(f) Except as set forth on Schedule 4.11(f), to the Sellers' Knowledge,
(i) Sellers have received all Property Permits which are necessary or
appropriate in connection with the Sellers' occupancy, ownership or leasing, as
the case may be, of the Premises, any construction or alterations being
performed by Sellers at the Premises, and Sellers' operation of the Business in
the Premises as it is currently conducted, (ii) all of such Property Permits
remain
-35-
<PAGE>
valid and in full force and effect, and (iii) the present use of the Premises
does not violate any such Property Permit. Except as set forth on Schedule
4.11(f), the Seller has not received written notice from any Governmental
Authority having jurisdiction over the Premises or from any applicable Board of
Fire Underwriters threatening a suspension, revocation, modification or
cancellation of any Property Permits.
(g) To the Sellers' Knowledge, the electricity service and all other
public or private utilities ("Utilities") serving the Premises are installed and
operating and are adequate for the conduct of the Business of the Sellers as
presently conducted.
(h) No Seller has received written notice or otherwise has Knowledge of
any pending or threatened (i) condemnation, eminent domain, expropriation or
similar proceeding affecting the Premises, (ii) proceeding to change the zoning
classification of any portion of the Premises or (iii) imposition of any special
assessments for public betterments affecting the Premises.
(i) To the Sellers' Knowledge, except as set forth on Schedule 4.11(i)
and as described in Section 9.8 hereof, the roofs and all structural elements of
all Improvements comprising a part of the Material Real Property, and the
heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer,
waste water, systems and facilities and other similar facilities, in each case,
if any, included therein are in, in all material respects, good working order
and repair.
(j) Except as described on Schedule 4.11(j), to the Sellers' Knowledge,
the Premises and the uses to which the Premises are presently put, are in
compliance with and not in default under or in violation of, any building,
zoning, land use, public health, public safety, sewage, water, sanitation or
other comparable Law, including without limitation, any designation or
restriction relating to historical site or landmark status, and no written
notice of any such default or violation has been received by any of the Sellers
which remains uncured. Except as set forth on Schedule 4.11(j) hereto, to the
Sellers' Knowledge, the Material Real Property and its continued use, occupancy
and operation as currently used, occupied and operated, and the right to repair
or rebuild any Improvements thereon in the event of a casualty, and does not
constitute a nonconforming use under any applicable Law and is not dependent on
any special permit, approval or variance (other than, in the case of any such
repair or rebuilding, those permits and approvals customarily required for
comparable work for comparable Improvements (e.g., building permits)).
(k) Copies of the applicable real estate tax bills for the Premises
most recently received by Sellers (as of the date hereof) have been delivered to
the Buyer by the Sellers. Except with respect to the New York Theater, said
bills cover the whole of the Premises and do not cover or apply to any other
property. Except as set forth on Schedule 4.11(k), the Sellers have not
initiated any currently pending application or proceeding with respect to a
reduction of the Taxes on the Premises.
(l) Except as set forth on Schedule 4.11(l), no Seller has transferred
any air rights or development rights applicable or appurtenant to the Premises,
nor, except as set forth on
-36-
<PAGE>
Schedule 4.11(l), have any signing rights been granted to any person other than
tenants under the Space Leases relating to their business conducted thereto.
(m) Except as noted on Schedule 4.11(m), there are no security deposits
under any of the Space Leases.
(n) In the last twelve (12) months, (i) no Seller has received written
notice from any insurance company or Board of Fire Underwriters (or organization
exercising functions similar thereto) requiring the performance of any work or
alteration of any of the Premises and (ii) no Seller has received written notice
from any insurance company of any termination of casualty insurance coverage
with respect to the Material Real Property.
(o) There is in full force and effect with respect to the Material Real
Property the casualty insurance described on Schedule 4.11(o).
Notwithstanding the foregoing, the representations and warranties set forth in
this Section 4.11 are not intended to, and do not, address matters relating to
Environmental Laws, Environmental Permits, Environmental Claims and the like (as
such matters are addressed by Section 4.16 hereof).
SECTION 4.12. TITLE, OWNERSHIP AND RELATED MATTERS. The Sellers have
good title to, or rights by license, lease or other agreement to use the Leased
Real Property (in the case of the N.Y. Sublease, assuming the Master Lease is in
full force and effect) and the other Purchased Assets free and clear of all
Liens other than Permitted Liens and, as of the Closing Date, subject to the
entry of the U.S. Order and the entry of the Canadian Order. The Sellers will,
at the Closing, have good title to, or rights by license, lease or other
agreement to use the Leased Real Property (in the case of the N.Y. Sublease,
assuming the Master Lease is in full force and effect) and the Personal Property
free and clear of all Liens other than Permitted Closing Liens.
SECTION 4.13. INTELLECTUAL PROPERTY. Schedule 4.13 sets forth a true
and complete list of all applications, patents and registrations for material
Intellectual Property that Sellers own or use in connection with the Business.
Except as set forth on Schedule 4.13, the Sellers either own or have the right
to use by license, sublicense, agreement or other permission all of the
Intellectual Property listed on Schedule 4.13. Except as set forth on Schedule
4.13, none of the Sellers has granted a license, or reached an understanding
with any third party, nor entered into a written agreement, relating in whole or
in part to any of the Intellectual Property of any Seller. Except as described
in Schedule 4.13 or as would not reasonably be expected to have a Seller
Material Adverse Effect, to the Knowledge of the Sellers, (i) the conduct of the
Business does not infringe upon any intellectual property right of any third
party, (ii) there are no pending or threatened proceedings or litigation or
other adverse claims by any Person against the use of any Intellectual Property
and (iii) there are no Persons engaged in conduct which infringes in any
material respect upon the Intellectual Property.
SECTION 4.14. CONTRACTS. The Assumed Contracts, together with the
Excluded Contracts, represent all material Contracts relating to the Business
and the Purchased Assets to which any of the Sellers is a party. The Sellers
have delivered or made available to the Buyer
-37-
<PAGE>
copies of all Assumed Contracts, which copies are true and complete in all
material respects. Except as set forth on Schedule 4.14, and subject to the
provisions of Section 13.5 hereof and subject to U.S. Bankruptcy Court or
Canadian Bankruptcy Court approval, as applicable, to assume the Assumed
Contracts, none of the Sellers will, on the Closing Date, be in default under
any Assumed Contract to which it is a party, except only for those defaults
which will be cured by the Sellers prior to the Closing in accordance with the
U.S. Order or Canadian Order, as applicable (or which need not be cured under
the U.S. Bankruptcy Code or the CCAA, as applicable, to permit the assumption
and assignment of Assumed Contracts) or for such defaults that would not
reasonably be expected to have a Seller Material Adverse Effect. To the
Knowledge of the Sellers, each of the Leases and other Assumed Contracts listed
on Schedule 4.14 is or will be at the Closing, binding and in full force and
effect as against each party (other than the Sellers) thereto. Schedule 4.14
sets forth the Sellers' reasonable good faith estimate of the amounts necessary,
as of the date hereof, to cure all defaults under the Assumed Contracts.
SECTION 4.15. TAX MATTERS. Except as set forth on Schedule 4.15, (i)
there are no Liens (other than Permitted Liens) affecting any of the Purchased
Assets that arose in connection with any failure or alleged failure to pay any
Tax which will attach to the Purchased Assets after the Closing, (ii) the Buyer
will not be liable for any material Taxes of any Seller relating to any period
prior to the Closing Date (a) under a Tax allocation, Tax indemnification or
other similar agreement of any Seller, or (b) based on the Buyer's status as a
transferee or successor to any Seller hereunder, (iii) none of the Purchased
Assets is "tax-exempt bond financed property" or "tax-exempt use property"
within the meaning of Section 168(g) or (h), respectively, of the Code, and (iv)
none of the Purchased Assets is required to be treated as being owned by any
other person pursuant to the "safe harbor" leasing provisions of Section
168(f)(8) of the Internal Revenue Code of 1954 as in effect prior to the repeal
of those "safe harbor" leasing provisions or any similar provisions of
applicable law. All taxes payable by the Sellers under the Retail Sales Tax Act
(Ontario) for the period commencing November 19, 1998 have been paid by them to
the applicable Governmental Authority.
SECTION 4.16. ENVIRONMENTAL MATTERS. To the Knowledge of the Sellers,
except as otherwise set forth on Schedule 4.16:
(a) The Sellers are in compliance with, and the Business has been
conducted in compliance with, all Environmental Laws and Environmental Permits,
and the Sellers have filed all reports required by any Governmental Authority to
be filed with respect to all Environmental Laws;
(b) No Land is a treatment, storage or disposal facility, as defined in
and regulated under the Resource Conservation and Recovery Act, 42 U.S.C ss.
6901 et seq., is on or ever was listed or is proposed for listing on the
National Priorities List pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., or on any similar
state list of sites requiring investigation or cleanup, and the Pantages Theater
has never been used as a landfill or waste disposal site;
(c) No Seller has received any notice (i) alleging, or giving notice
of, any liability or any potential liability under Environmental Law and (ii)
that remains pending or
-38-
<PAGE>
outstanding with respect to the Business or any Land from any Governmental
Authority or Person alleging that any Seller is not in compliance with any
Environmental Law;
(d) There has been no reportable Release (as defined below) at, from,
in, to, on or under any Land caused by the acts or omissions of any Seller, and
no Hazardous Materials are present in, on, about or migrating to or from any
Land that could give rise to an Environmental Claim (as defined below) against
any Seller;
(e) There are no pending or outstanding corrective actions requested,
required or being conducted by any Governmental Authority for the investigation,
remediation or cleanup of any Land or any parcel of the Premises;
(f) The Business has obtained and holds all necessary Environmental
Permits, and those Environmental Permits may be transferred to the Buyer after
the consummation of the transactions contemplated hereby;
(g) There are no past, pending or threatened Environmental Claims
against any Seller or the Business or the Purchased Assets, and no Seller is
aware of any facts or circumstances which would reasonably be expected to form
the basis for any Environmental Claim against any Seller, the Business or the
Purchased Assets;
(h) There are no (i) above-ground or underground storage tanks, active
or abandoned, (ii) polychlorinated biphenyl-containing equipment, (iii) friable
asbestos-containing material or (iv) "recognized environmental conditions" as
that term is used in ASTM E-1527-97 at any Land;
(i) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses (which have been reduced to writing) conducted
by, on behalf of, or that are in the possession of any Seller with respect to
any Land or any parcel of the Premises or any transportation, handling or
disposal of any Hazardous Materials that has not been delivered to the Buyer
prior to execution of this Agreement; and
(j) As used herein, (i) "Environment" means all air, surface water,
groundwater or land, including land surface or subsurface, including all fish,
wildlife, biota and all other natural resources; (ii) "Environmental Claim"
means any and all administrative or judicial actions, suits, orders, claims,
liens, notice, notices of violations, investigations, complaints, request for
information, proceedings or other communications (written or oral), whether
criminal or civil, pursuant to or relating to any applicable Environmental Law
by any person (including, but not limited to, any Governmental Authority, Person
and citizens' group) based upon, alleging, asserting, or claiming any actual or
potential (x) violation of or liability under any Environmental Law, (y)
violation of any Environmental Permit, or (z) liability for investigatory costs,
cleanup costs, removal costs, remedial costs, response costs, natural resource
damages, property damage, personal injury, fines, or penalties arising out of,
based on, resulting from, or related to the presence, Release, or threatened
Release into the Environment, of any Hazardous Materials at any location,
including, but not limited to, any off-Land location to which Hazardous
Materials or materials containing Hazardous Materials were sent for handling,
-39-
<PAGE>
storage, treatment or disposal; (iii) "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of Hazardous Materials into the Environment; and
(iv) for purposes of this Section 4.16, the term "Land" shall not include
Sellers' right, title and interest, if any, in and to the strips and gores,
streets, highways and alleys abutting or adjacent to the Purchased Real Property
and Leased Real Property.
SECTION 4.17. NO MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS. Since
the Balance Sheet Date, except (i) in connection with the filing of the
Bankruptcy Cases, (ii) with respect to any matter for which there is a purchase
price adjustment pursuant to Section 2.3 or 2.4 and (iii) as set forth on
Schedule 4.17, there has been no event or occurrence which would reasonably be
likely to result in a Seller Material Adverse Effect. Except as set forth on
Schedule 4.17, since the Balance Sheet Date, the Business has been conducted in
the ordinary course of business. Except as set forth on Schedule 4.17, since the
Balance Sheet Date, the Sellers have not:
(a) created, incurred, assumed or granted, or permitted or allowed any
of the Purchased Assets to be subject to any Lien other than Permitted Liens or
other Liens that are no longer outstanding;
(b) amended, terminated, canceled, or compromised any claims of the
Sellers, canceled, forgave or discharged any debt owed to the Sellers, or waived
any other rights of value to the Sellers, except (i) in the ordinary course of
business consistent with past practice and (ii) claims which arose prior to the
Petition Date;
(c) sold, transferred, leased, subleased, licensed, assigned,
encumbered, pledged or otherwise disposed of any of the Purchased Assets whether
real, personal or mixed, other than in the ordinary course of business;
(d) incurred any material damage, destruction or similar loss, whether
or not covered by insurance, which materially and adversely affects the Business
or the Purchased Assets;
(e) suffered any material change in the Sellers' business policies or
practices, or any material change in the nature of the business relationships
with its customers, employees and suppliers or entered into any contract,
agreement or understanding with customers to provide services which is not
included as an Excluded or Assumed Contract, except in the ordinary course of
business consistent with past practice;
(f) other than with respect employees covered under Collective
Bargaining Agreements and employees with annual salary of less than $80,000,
increased the compensation payable or to become payable to any of its officers,
directors, employees or agents, or made any bonus payment to or similar
arrangement with any such Person, other than pursuant to existing plans,
arrangements or agreements;
-40-
<PAGE>
(g) failed to maintain its Premises and equipment on the Premises,
consistent with past practice; or
(h) entered into any agreement or understanding, written or otherwise,
to do any of the foregoing.
SECTION 4.18. INVESTMENT UNDERTAKING.
(a) Each Seller acknowledges that the Warrants to be issued, the Common
Stock underlying such Warrants and the Put Obligation (for purposes of this
Section 4.18, collectively, the "Securities") to each Seller pursuant to this
Agreement will be "restricted securities" within the meaning of Rule 144 (the
"Rule 144") promulgated under the General Rules and Regulations of the
Securities Act. Each Seller acknowledges that it is acquiring such Securities
for the Seller's own account and not with a view to their distribution within
the meaning of Section 2(11) of the Securities Act. Each Seller acknowledges
that the Seller understands that it must bear the economic risk of the
investment indefinitely because the Securities may not be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from registration is
available.
(b) Each Seller is a sophisticated investor which either (i) has such
knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of its investment in the Securities
being acquired hereunder, or (ii) has obtained independent professional
financial advice sufficient to enable it to evaluate the merits and risks of its
investment in the Securities being acquired hereunder.
(c) The only Seller who will be issued Securities pursuant to a trade
(as such term is understood for the purposes of Canadian securities laws) in
Canada is Livent. Any Securities to be issued to Livent are to be issued
pursuant to the exemption set out in Section 72(1)(l) of the Securities Act
(Ontario) and Section 2.11 of Rule 45-501 of the Ontario Securities Commission.
Livent acknowledges that the assets being transferred to the Buyer in
consideration for such Securities have a fair value of not less than Canadian
$150,000. Livent further acknowledges that any Securities to be issued to it and
the Common Stock underlying any Warrants issued to Livent will be subject to
hold periods under Canadian securities laws.
SECTION 4.19. EXCISE TAX ACT REGISTRATION. Livent is duly registered
under subdivision d of Part IX of the Excise Tax Act (Canada), and its business
number is 893159061 RT.
SECTION 4.20. BROKERS. Except for SG Cowen Securities Corporation, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Sellers or dealt
with any other brokers or finders in connection with the transactions
contemplated hereby. The Sellers are solely responsible for the fees and
expenses of SG Cowen Securities Corporation.
-41-
<PAGE>
SECTION 4.21. QUEBEC SALES TAX.. Each Seller with assets or operations
in Quebec is duly registered under an Act respecting the Quebec sales tax
("QST"), and each such Seller's respective QST registration number is set forth
as follows: 1017342955.
SECTION 4.22. NOT A NON-RESIDENT. Livent is the only Seller with assets
used in connection with carrying on a business in Canada that are "taxable
Canadian property," as defined in the Income Tax Act (Canada), as amended (the
"ITA"). Livent is not a non-resident of Canada for the purposes of the ITA.
SECTION 4.23. COMPETITION ACT. The Sellers together with their
affiliates do not have assets in Canada that exceed Canadian $200 million in
aggregate value and did not have gross revenues from sales in, from or into
Canada that exceeds Canadian $200 million in aggregate value, determined for
purposes of and in the manner prescribed by the CA and the regulations
promulgated thereunder.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Sellers as follows:
SECTION 5.1. CORPORATE ORGANIZATION. The Buyer and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, and has all requisite
corporate power and authority to own its properties and assets and to conduct
its businesses as now conducted.
SECTION 5.2. QUALIFICATION TO DO BUSINESS. The Buyer and each of its
subsidiaries is duly qualified, licensed or registered to carry on its business
and is in good standing in every jurisdiction in which the character of the
properties owned or leased by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
would not reasonably be expected to have a Buyer Material Adverse Effect.
SECTION 5.3. AUTHORIZATION AND VALIDITY OF AGREEMENT. The Buyer has all
requisite corporate power and authority to enter into the Buyer Transaction
Documents and to carry out its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery of the Buyer
Transaction Documents, the performance of the Buyer's obligations thereunder and
the consummation of the transaction contemplated thereby have been duly
authorized by all necessary corporate action by the Board of Directors of the
Buyer, and no other corporate proceedings (including, without limitation,
shareholder proceedings) on the part of the Buyer are necessary to authorize
such execution, delivery and performance of the Buyer Transaction Documents.
This Agreement and the Deposit Escrow Agreement have been duly executed by the
Buyer and constitute its valid and binding obligations, enforceable against it
in accordance with their terms.
SECTION 5.4. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by the Buyer of the Buyer Transaction Documents and the consummation
of the transactions
-42-
<PAGE>
contemplated thereby do not and will not: (A) violate or conflict with any
provision of the Certificate of Incorporation or By-laws (or equivalent
documents) of the Buyer; (B) violate any provision of Law, or any Order
applicable to the Buyer, or (C) violate, result in a breach of, or constitute
(with due notice or lapse of time or both) a default, under any contract, lease,
loan agreement, mortgage, security agreement, trust indenture or other agreement
or instrument to which the Buyer or any of its subsidiaries is a party or by
which they are bound or to which any of their properties or assets is subject;
except, in the case of clauses (B) and (C), for any violation, breach or default
that would not reasonably be expected to have a Buyer Material Adverse Effect.
SECTION 5.5. CONSENTS AND APPROVALS. The execution, delivery and
performance of the Buyer Transaction Documents on behalf of the Buyer and the
consummation of the transactions contemplated thereunder do not require the
consent or approval of, or filing with, any Governmental Authority or other
Person except: (i) as may be required to transfer any Licenses and Permits; (ii)
as required pursuant to the HSR Act or the ICA; (iii) entry of the U.S. Order by
the U.S. Bankruptcy Court and the Canadian Order by the Canadian Bankruptcy
Court; or (iv) such consents, approvals and filings, of which the failure to
obtain or make would not, individually or in the aggregate, have a Buyer
Material Adverse Effect.
SECTION 5.6. AUTHORIZATION AND VALIDITY OF WARRANTS AND COMMON STOCK.
The shares of Common Stock to be issued pursuant to the Warrants, have been duly
authorized, and, when issued in accordance with the terms of the Warrants, will
be validly issued and fully paid and nonassessable. The Buyer has reserved the
number of shares of Common Stock to be issued pursuant to the Warrants.
SECTION 5.7. BUYER SEC DOCUMENTS AND FINANCIAL STATEMENTS. The Buyer
has filed all required documents with the SEC since its initial public offering
on August 27, 1998 (the "Buyer SEC Documents"). As of their respective dates,
the Buyer SEC Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder applicable to such Buyer SEC Documents. At
the respective times they were filed, none of the Buyer SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of the Buyer included in the Buyer SEC Documents complied as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto as of their
respective dates of filing. The financial statements included in the Buyer SEC
Documents were prepared in accordance with U.S. generally applicable accounting
principles ("U.S. GAAP") applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly presented in all material
respects the consolidated financial position of the Buyer and its subsidiaries
as of the respective dates thereof and the consolidated results of operations
and cash flows for the periods then ended (subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and any other
adjustments described therein and the fact that certain information and notes
have been condensed or omitted in accordance with the Exchange Act and the rules
promulgated thereunder). Except as disclosed in the Buyer SEC Documents or as
-43-
<PAGE>
required by U.S. GAAP, the Buyer has not, since December 31, 1998, made any
change in the accounting practices or policies applied in the preparation of its
financial statements.
SECTION 5.8. NO MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS. Since
December 31, 1998, there has been no event or occurrence which would reasonably
be likely to result in a Buyer Material Adverse Effect.
SECTION 5.9. AVAILABILITY OF FUNDS. Buyer has, and will have on the
Closing Date, the financial capability to pay the Estimated Purchase Price on
the Closing Date.
SECTION 5.10. ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS. The
Buyer is and will be capable of satisfying the conditions contained in Sections
365(b)(1)(C) and 365(f) of the U.S. Bankruptcy Code with respect to the
Executory Contracts.
SECTION 5.11. BROKERS. The Buyer has not agreed to pay any party a
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement and has not taken any action on
which a claim for any such payment could be based or dealt with any brokers or
finders in connection with the transactions contemplated hereby.
SECTION 5.12. EXCISE TAX ACT REGISTRATION. The Buyer is, or will be on
the Closing Date, registered under Subdivision d of Part IX of the Excise Tax
Act (Canada).
SECTION 5.13. INVESTIGATION BY BUYER. In entering into this Agreement,
the Buyer has relied solely upon its own investigation and analysis of the
Business, the Purchased Assets and the Assumed Liabilities, and the Buyer (a)
acknowledges that neither any of the Sellers nor any of their directors,
officers, employees, Affiliates, controlling persons, agents or representatives
makes or has made any representation or warranty, either express or implied, as
to the accuracy or completeness of any of the information provided or made
available to the Buyer or its directors, officers, employees, Affiliates,
controlling persons, agents or representatives, except as and only to the extent
expressly set forth herein and the other Sellers' Transaction Documents, and
subject to the limitations and restrictions, contained in this Agreement and the
other Sellers' Transaction Documents, and (b) agrees, to the fullest extent
permitted by law, that none of the Sellers' directors, officers, employees,
Affiliates (other than any Seller), controlling persons (other than any Seller),
agents or representatives shall have any liability or responsibility whatsoever
to the Buyer or its directors, officers, employees, Affiliates, controlling
persons, agents or representatives on any basis (including, but not limited to,
in contract or tort, under federal, state or foreign securities laws or
otherwise) based upon any information provided or made available, or statements
made, to the Buyer or its directors, officers, employees, Affiliates,
controlling persons, agents or representatives (or any omissions therefrom),
including, but not limited to, in respect of the specific representations and
warranties of the Sellers set forth in this Agreement.
-44-
<PAGE>
ARTICLE VI.
FURTHER AGREEMENTS BETWEEN THE PARTIES
SECTION 6.1. CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Without the
prior written consent of the Buyer (which consent shall not be unreasonably
withheld) or unless otherwise ordered by the U.S. Bankruptcy Court or Canadian
Bankruptcy Court sua sponte or on motion by a third party or as otherwise
required by Law (as advised by counsel), between the date hereof and the Closing
Date, the Sellers shall, except as required or expressly permitted pursuant to
the terms hereof or as expressly set forth on Schedule 6.1, conduct the Business
in the ordinary course, consistent with past practice, and in such a manner that
would not result in a Seller Material Adverse Effect. Notwithstanding the
foregoing, prior to the Closing Date, except as the Buyer may otherwise consent
to in writing (which consent shall not be unreasonably withheld), or unless
otherwise ordered by the U.S. Bankruptcy Court or Canadian Bankruptcy Court sua
sponte, the Sellers shall not take the following actions with respect to the
Business and Purchased Assets:
(a) acquire, sell, lease, transfer or dispose of any of the Purchased
Assets or enter into any commitment to do so, except with respect to Purchased
Assets that are obsolete and no longer used in connection with the Business, and
that the Sellers shall be free to engage in any transaction with respect to its
Cash, Cash Equivalents, Accounts Receivable, sundry assets and prepaid expenses,
Inventory, accounts payable and accrued royalties, accrued compensation and
deferred revenue in the ordinary course of business;
(b) other than in the ordinary course of business, modify any pricing
policy, practice or procedure or any volume requirement with respect to Purchase
Orders or incurring of accounts payable;
(c) other than in the ordinary course of business, modify any price
list, or any pricing policy, practice or procedure with respect to Sales and
Ticket Orders or Advance Ticket Sales;
(d) other than in the ordinary course of business, modify any policy,
practice or procedure with respect to the marketing, advertising or promotion of
any of the Productions;
(e) other than in the ordinary course of business, modify any policy,
practice or procedure with respect to the collection of accounts receivable or
the conduct of business with Sellers' Ticket Agents;
(f) take any action that would result in the creation, or consent to
the imposition, of any Lien on any of the Purchased Assets (other than Permitted
Closing Liens) to the extent created, or consented to in the ordinary course of
business, that remains outstanding as of the Closing Date;
(g) make any commitment for Improvements or other capital assets in
excess of an aggregate of $250,000 which is to be paid on or after the Closing
Date;
-45-
<PAGE>
(h) other than in the ordinary course of business, amend, waive,
surrender or terminate or agree to the amendment, waiver, surrender or
termination of any Assumed Contract or exercise any right under any Assumed
Contract; provided, that in the case of Assumed Contracts relating to the
Productions "Fosse," "Ragtime" and "Phantom of the Opera," the effect of any
such amendment, waiver, surrender, termination or exercise of any right does not
result in any increase in the post-Closing operating expenses for any such
Production in an amount in excess of 5% of the operating expense of such
Production as set forth in the Information Package or, when taken in the
aggregate result in any increase of the aggregate post-closing operation expense
for all three Productions, in an amount in excess of 5% of the aggregate
post-Closing operating expense for such Productions as set forth in the
Information Package; and provided, further, that the provisions of this
subsection (h) shall not apply to Assumed Collective Bargaining Agreements;
(i) enter into any Contract or commitment with respect to any
Pre-Production Expenditures that does not terminate on or prior to the Closing,
or that is not terminable at will and without penalty, by the Buyer;
(j) without the prior written consent of the Buyer, enter into any
verbal or written agreement with any labor organization which is a party to any
of the Assumed Collective Bargaining Agreements which in any way or manner
affects the Buyer's rights, obligations or liabilities on or after the Closing
Date under any of the Assumed Collective Bargaining Agreements or to employees
included in the bargaining units of any of the Assumed Collective Bargaining
Agreements, or settle any grievance, arbitration, or other dispute where it
would reasonably be expected to have a material impact on the Buyer's rights,
obligations or liabilities under the Assumed Collective Bargaining Agreements;
(k) amend, modify, terminate, extend, renew or cancel any of the Leases
or Space Leases nor enter into any such leases as lessor or lessee regarding the
Premises that would materially interfere with the use or benefits of the
Premises and in no event extend beyond September 30, 1999, or any other
property; or
(l) enter into any contract to do, or take, or agree in writing or
otherwise to take or consent to, any of the foregoing actions;
provided, however, that to the extent any such actions are permitted by clauses
(a) through (l), such actions, individually or in the aggregate, would not and
do not have a Seller Material Adverse Effect.
Notwithstanding any limitation set forth herein, the Sellers may (i)
take such actions, if any, with respect to any Purchased Assets, reasonably
necessary to comply with the terms of the Contracts or any insurance
requirements or to comply with laws, rules or regulations of any Governmental
Authority and (ii) take such actions with respect to any Purchased Assets
reasonably necessary to prevent loss of life, personal injury or property
damage.
If Buyer's consent is required under this Section 6.1, but Buyer does
not object in writing within five (5) Business Days after Buyer's receipt of
Sellers' written request for such
-46-
<PAGE>
consent, then Buyer will be deemed to have given such consent and will confirm
such consent in writing upon demand.
SECTION 6.2. CONSENTS; HSR ACT. (a) The parties hereto shall use their
commercially reasonable efforts to obtain all necessary Consents of Governmental
Authorities, and of all other Persons (as identified on Schedule 4.5) required
to be obtained by such party in connection with the execution, delivery and
performance by them of this Agreement and the other Transaction Documents. The
parties shall promptly file with the United States Federal Trade Commission and
the United States Department of Justice all notification and report forms
required to be filed by the parties, and shall file all supplemental information
which may be reasonably requested in connection therewith, pursuant to the HSR
Act, which notification and report form and supplemental information shall
comply in all material respects with the requirements of the HSR Act. The
parties shall request early termination of the waiting period under the HSR Act
for the sale of the Purchased Assets.
(b) The Buyer and, to the extent required by applicable Law, the
Sellers shall file on a confidential basis with respect to the purchase and sale
of the Purchased Assets, within 15 days of this date, an application for review
pursuant to and (subject to receipt of any requests for additional information)
in compliance with the ICA or, at the Buyer's option, the Buyer shall, within 15
days of this date, provide notice to Investment Canada in the form prescribed.
The Buyer shall also make such filings as are necessary under the ICA and, in
each case, shall promptly furnish any additional information requested of it
under such Act to the extent such information is in the Buyer's possession or
under its control or direction. The Buyer will agree to provide any undertakings
or abide by any conditions required by Industry Canada to obtain any ICA
approval, which are not materially adverse to the Buyer or the Buyer's intended
use of the Purchased Assets in the opinion of the Buyer acting reasonably. The
Buyer and the Sellers will use their commercially reasonable best efforts to
keep confidential all notices, applications, information and correspondence
contemplated by this Section 6.2 on the same basis as set forth in Section 6.3.
(c) With respect to an application for review pursuant to the ICA, the
Buyer shall promptly furnish any additional information requested of it under
such Act to the extent such information is in the Buyer's possession or under
its control or direction. The Sellers shall promptly provide the Buyer at its
request with all information that the Sellers have in their possession or under
their direction or control which, in the Buyer's opinion, is reasonably
necessary in connection with the application or the notifications. The Buyer
shall keep the Sellers reasonably informed as to the status of the proceedings
related to the above applications and notifications, but the Buyer shall be
under no obligation to deliver to the Sellers copies of any notices or
information supplied or filed by the Buyer under the ICA or any correspondence
with the officials under the ICA, or any information relating to the Buyer or
its activities or plans whether of a confidential nature or in the public
domain; provided, however, that the Buyer shall provide the Sellers with copies
of the applications and notifications or appropriate portions thereof, in draft
form and containing only information relating to the Sellers in order for the
Sellers to confirm that such information is consistent with information
previously given to the Buyer by the Sellers.
-47-
<PAGE>
(d) The parties shall be responsible for their own fees for such
filings in connection with complying with this Section 6.2.
SECTION 6.3. ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY. The
Sellers shall afford to the Buyer, and to the accountants, counsel, agents and
representatives of the Buyer, reasonable access during normal business hours
throughout the period ending on the later of (i) first anniversary of the
Closing Date and (ii) the consummation of a plan of reorganization or
liquidation of the Sellers, to the Corporate Documentation and all books and
records of the Sellers relating to the Business, the Purchased Assets and the
Assumed Liabilities. The rights of access contained in this Section 6.3 are
granted subject to, and on, the following terms and conditions: (i) any such
access will be conducted in such a manner as not to interfere unreasonably with
the operation of the business of the Sellers; (ii) during such period all
information provided to the Buyer or its representatives by or on behalf of the
Sellers or their representatives (whether pursuant to this Section 6.3 or
otherwise) will be governed and protected by the Confidentiality Agreement dated
March 1, 1999 between the Buyer and Livent (the "Confidentiality Agreement") and
(iii ) such rights of access shall be governed and protected by the provisions
of the Access Agreement. Before Buyer and/or its representatives enter onto the
Premises, Buyer shall furnish to Sellers evidence reasonably satisfactory to
Sellers of liability insurance in amount, form and substance, and issued by an
insurance company, reasonably satisfactory to Sellers and naming Sellers as
additional insureds. The provisions of the immediately preceding sentence shall
survive the Closing.
SECTION 6.4. FURTHER ASSURANCES. (a) Upon the request of the Buyer at
any time after the Closing Date, the Sellers shall do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
further deeds, assignments, affidavits, transfers and conveyances as may be
required for the better assigning, transferring, granting, conveying and
confirming to the Buyer, or for aiding and assisting in collecting and reducing
to possession, any or all of the Purchased Assets.
(b) Upon the request of the Sellers at any time after the Closing Date,
the Buyer shall forthwith execute and deliver such documents as the Sellers or
their counsel may reasonably request to assume, pay, perform and discharge when
due all Assumed Liabilities.
(c) The Sellers shall promptly pay to the Buyer any and all cash from
the Accounts Receivable (other than Ticketmaster Receivables) that they may
receive from and after the Closing.
(d) The provisions of this Section 6.4 shall survive the Closing.
SECTION 6.5. REASONABLE EFFORTS. Upon the terms and subject to the
conditions of this Agreement, the Buyer and the Sellers will use their
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary or proper consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
-48-
<PAGE>
SECTION 6.6. ALTERNATIVE TRANSACTION. The Sellers shall, within five
(5) days from the execution of this Agreement, (i) file an application in the
U.S. Bankruptcy Court scheduling a hearing on expedited and shortened notice to
approve the break-up fee and expense reimbursement provisions set forth in
Sections 9.1(c), 9.1(d), 9.2 and 14.2(b) and the Alternative Transaction
provisions set forth in this Section 6.6 and the related expense reimbursement
provisions (the "Break-Up Fee Order "), a copy of which is attached hereto as
Exhibit J, and (ii) file an application in the Canadian Bankruptcy Court, unless
the Seller's Cross Border Insolvency Protocol (the "Protocol") has been approved
by both the U.S. Bankruptcy Court and the Canadian Court, in which case, the
Sellers shall need to file such application only with the U.S. Bankruptcy Court
and seek the consent of the monitor pursuant to the terms of the Protocol,
granting the relief set forth in the preceding sentence (the "Canadian
Approval"). If the Break-Up Fee Order is not entered and the Canadian Approval
is not obtained within ten (10) Business Days from the date of filing of the
application (or such longer period as the Buyer may agree in writing), the Buyer
may, at its discretion, on written notice to Sellers, terminate this Agreement
without any liability to the Sellers. Until the later to occur of the
procurement of the Break-Up Fee Order and the Canadian Approval, the Sellers
shall not, and shall not permit their Affiliates, or any of their respective
officers, directors, employees or professionals, including, but not limited to
those professionals retained under Section 327 of the U.S. Bankruptcy Code, to,
directly or indirectly, (i) initiate, solicit, encourage or otherwise facilitate
(including by way of furnishing information other than copies of applications to
obtain the Break-Up Fee Order and the exhibits thereto) any inquiries or the
making of any proposal or offer that constitutes, or may reasonably be expected
to lead to, an Alternative Transaction, (ii) otherwise, directly or indirectly,
provide information to, or participate in any discussions or negotiations with,
any Person which relates to, or could reasonably be expected to lead to, an
Alternative Transaction, or (iii) enter into, or agree to enter into, any
Alternative Transaction. In their application seeking approval of the Break-Up
Fee Order, the Sellers shall seek approval of bidding and notice procedures
reasonably acceptable to the Buyer which bidding and notice procedures shall set
forth the terms and conditions of an auction for an Alternative Transaction
which shall be subject to the Break-Up Fee Order. Subsequent to the entry of the
Break-Up Fee Order and the Canadian Approval, Sellers or their Affiliates, or
any of their respective officers, directors, employees or professionals shall
not initiate, solicit encourage or facilitate an Alternative Transaction,
provided that, if Sellers receive any inquiry, proposal, request for information
or offer in connection with a proposed Alternative Transaction, the Sellers may
provide information or participate in discussions necessary to fulfill their
fiduciary obligation (as advised by counsel) to maximize the value of their
estates; and provided, further, that filing and serving any application or other
pleading (including publication of notice) seeking to approve this Agreement and
the transactions contemplated hereby with the U.S. Bankruptcy Court or the
Canadian Bankruptcy Court shall not constitute the solicitation of an
Alternative Transaction. The Sellers agree to provide promptly to Buyer copies
of any written inquiries or written requests for information regarding an
Alternative Transaction (and any written response furnished by Livent in
response to any oral inquiry or request for information regarding an Alternative
Transaction) and any written bids or proposals for an Alternative Transaction.
SECTION 6.7. LIVENT HEADQUARTERS LICENSE AGREEMENT. At the Closing, the
Buyer and the Sellers agree to enter into a license agreement, in form and
substance reasonably
-49-
<PAGE>
satisfactory to the Sellers and the Buyer, with respect to the Buyer's use of a
portion of the Livent Headquarters for a period of three (3) months after the
Closing for no license fee; provided that the Buyer shall be responsible for its
pro rata share of customary operating expenses and real estate tax and
assessment "pass-throughs," as well as condominium common charges.
SECTION 6.8. PROCUREMENT OF ORDERS; ADEQUATE ASSURANCES REGARDING
ASSUMED CONTRACTS. (a) The Sellers agree that they shall promptly take all
reasonable actions as are necessary in obtaining (i) the U.S. Bankruptcy Court's
entry of the Break-Up Fee Order and the U.S. Order, (ii) the Canadian Approval
and (iii) the Canadian Bankruptcy Court's entry of the Canadian Order, and the
Buyer agrees that it shall promptly take all actions as are reasonably requested
by the Sellers to assist them in obtaining said bankruptcy court orders,
including, but not limited to, furnishing affidavits, financial information or
other documents or information for filing with the U.S. Bankruptcy Court or the
Canadian Bankruptcy Court or the monitor, as the case may be, and making the
Buyer's employees and representatives available to testify before the U.S.
Bankruptcy Court or the Canadian Bankruptcy Court. The Sellers agree to include
as recipients of all materials to be distributed in connection with the
application for the U.S. Order and the Canadian Order all Persons reasonably
requested by the Buyer (which shall include, without limitation, all secured
creditors of the Sellers and all Persons with proprietary claims and trust
claims against any Seller).
(b) Not less than fifteen (15) days prior to the Closing, the Sellers
shall deliver to the Buyer a schedule ("Schedule of Assumed Contract
Deficiencies") which shall list all Assumed Contracts, as set forth on the
Schedule of Assumed Contracts (Schedule 4.14(a) hereto) and shall indicate as to
each Assumed Contract any and all amounts necessary or required under Section
365(b) of the Bankruptcy Code to remedy and cure all monetary arrears,
deficiencies or other obligations under each of the Assumed Contracts ("Assumed
Contract Deficiencies") in order to fully effectuate the assumption and
assignment of such Assumed Contracts. The Buyer shall have the right to obtain
appropriate assurances and certifications from the Sellers or the U.S.
Bankruptcy Court that the Sellers have paid, or made arrangements reasonably
acceptable to the Buyer to satisfy, all such Assumed Contract Deficiencies. The
Schedule of Assumed Contract Deficiencies shall be delivered with a
certification, duly executed by a senior financial officer of Livent, which
certification shall constitute a representation and warranty under this
Agreement, that the information contained thereon reflects the Sellers' best
estimate of the Liabilities in respect of the Assumed Contracts.
(c) With respect to each Assumed Contract, the Buyer shall provide upon
request as may be reasonably required in the applicable proceeding in the U.S.
Bankruptcy Court and for the Canadian Bankruptcy Court, evidence of adequate
assurance of its future performance of such contract by the Buyer, including,
but not limited to, furnishing affidavits, financial information or other
documents or information for filing with the U.S. Bankruptcy Court or the
Canadian Bankruptcy Court and making the Buyer's employees and representatives
available to testify before the U.S. Bankruptcy Court or the Canadian Bankruptcy
Court, all of which demonstrate adequate assurance of future performance by the
Buyer or any of its designees under the Assumed Contracts.
-50-
<PAGE>
(d) The Sellers shall (i) use their commercially reasonable best
efforts to have the U.S. Bankruptcy Court find in the U.S. Order that the
transactions contemplated herein, while outside of the Reorganization Plan, were
made necessary by continuing losses and rapidly depleting assets of the Sellers;
(ii) cause notice of the transactions contemplated herein to be given to each
creditor and equity security holder of the Sellers, each of whom shall be given
the opportunity to object to the sale; and (iii) in connection with confirmation
of the Reorganization Plan, prepare and distribute to all creditors and equity
holders of the Company a disclosure statement approved by the U.S. Bankruptcy
Court which shall describe the Warrants and conform to Section 1125 of the U.S.
Bankruptcy Code and cause same to be sent to each creditor and equity security
holder of the Sellers.
SECTION 6.9. PANTAGES NAMING AGREEMENT. The Buyer shall use its
commercially reasonable best efforts consistent with its business practices to
enter into with a third party, as soon as practicable after the Closing Date, a
binding agreement with respect to the naming rights for the Pantages Theater,
pursuant to which the Buyer shall recognize revenue in its financial statements
accordance with U.S. GAAP.
SECTION 6.10. APPLICATION FOR "NO ACTION" LETTER. As soon as
practicable after the date hereof, the Buyer shall apply for a "no action"
letter from the Staff of the SEC (the "No Action Letter") seeking confirmation
that the Division of Corporation Finance of the SEC will not recommend
enforcement action to the SEC with respect to (i) the Buyer's issuance of the
Warrants prior to the confirmation of the Reorganization Plan without
registration under the Securities Act; (ii) provided the transferor is not an
"underwriter," as defined in Section 1145 (b)(1) of the U.S. Bankruptcy Code,
any recipient of the Warrants in such distribution may resell the Warrants
without registration under the Securities Act except that, if the transferor is
an affiliate (within the meaning of Rule 144) of the Buyer, such resale must be
in accordance with all of the provisions of Rule 144 other than the holding
period requirement of paragraph (d) of Rule 144; (iii) a Person, regardless of
whether the initial recipient of a Warrant or a direct or indirect purchaser or
transferee of a Warrant, may exercise the Warrant without registration under the
Securities Act; and (iv) provided the transferor is not an "underwriter," as
defined in Section 1145(b)(1) of the U.S. Bankruptcy Code, any recipient of
Common Stock acquired upon the exercise of Warrants may resell such stock
without registration under the Securities Act except that, if the transferor is
an affiliate (within the meaning of Rule 144) of the Buyer, such resale must be
in accordance with all of the provisions of Rule 144 other than the holding
period requirement of paragraph (d) of Rule 144.
ARTICLE VII.
EMPLOYEES AND EMPLOYEE PLANS
SECTION 7.1. OFFER OF EMPLOYMENT.
(a) Transferred Employees. Effective as of the Closing Date, (i) the
Buyer shall assume and be bound by the terms and provisions of the collective
bargaining agreements set forth on Schedule 7.1(a) (the "Assumed Collective
Bargaining Agreements") and the employment or other similar agreements or
arrangements (the "Union Employment Agreements") between any of the Sellers and
any employees employed by the Sellers who are members of any
-51-
<PAGE>
of the bargaining units covered by the Assumed Collective Bargaining Agreements
(other than employees who declined employment with the Buyer on the Closing
Date) (the "Union Employees"), including all severance obligations accrued as of
the Closing Date with respect to all Union Employees under such Assumed
Collective Bargaining Agreements and Union Employment Agreements, but
specifically excluding any "withdrawal liability" under Section 4201 of ERISA
which arises on or prior to the Closing Date, and (ii) the Sellers shall assign
to the Buyer those Assumed Collective Bargaining Agreements that cover the
Sellers' United States Union Employees. Effective as of the Closing Date, the
Buyer shall employ all Union Employees in accordance with the terms and
conditions of (i) the applicable Assumed Collective Bargaining Agreements and
(ii) the employment or other similar agreements or arrangements between any of
the Sellers and any Union Employment Agreements. All employees of the Sellers
who are employed by the Buyer as of the Closing Date shall be referred to herein
as "Transferred Employees."
(b) Non-Transferred Employees. Effective as of the Business Day
immediately preceding the Closing Date, the Sellers shall terminate the
employment of all of the Sellers' employees other than the Union Employees and
those employees of the Sellers who shall remain in the Sellers' employ after
such date.
(c) Accrued Vacation and Sick Days. The Buyer shall assume all
liabilities with respect to the vacation and sick days payments accrued as of
the Closing Date with respect to all Union Employees but only to the extent
accrued on the Closing Date Balance Sheet. The Buyer shall make payments to the
Union Employees with respect to such vacation and sick days obligations at such
times as such payments are required to be made under the applicable Assumed
Collective Bargaining Agreements and the Union Employment Agreements.
(d) Terms of Employment. Except as expressly provided in Sections
7.1(a) and (c) and Section 7.3, the Buyer shall not be obligated to (i) hire or
offer to hire, engage or offer to engage, any of the Sellers' other employees or
(ii) continue the employment of any Transferred Employee, or to provide any
other specific benefits for any period of time after the Closing Date. Upon
request of the Buyer, the Sellers shall provide the Buyer, on or promptly after
the date of this Agreement, reasonable access to, and shall provide copies of
data (including, but not limited to computer data) regarding the dates of hire,
compensation and job description of the Transferred Employees.
SECTION 7.2. LIABILITIES. Except as otherwise provided in Sections 2.5,
7.1 and 7.3, the Buyer shall not assume or be liable or responsible for any
employment-related Liability of, or with respect to, the Sellers arising (i)
prior to the Closing Date, or (ii) on the Closing Date as a result of the
transactions contemplated by this Agreement, including, without limitation, any
liability or obligation of the Sellers arising out of or relating to: (a) any
violation by the Sellers of United States, state, local, Canadian or provincial
employment or labor related statutes or common law or Canadian or provincial
human rights statute or common law, including, but not limited to, Title VII of
the Civil Rights Act, the Americans with Disabilities Act, the Equal Pay Act,
the Age Discrimination in Employment Act, the Fair Labor Standards Act, ERISA,
the National Labor Relations Act, the Worker Adjustment and Retraining
Notification Act, the Family and Medical Leave Act, state, local or provincial
fair employment practices acts, state,
-52-
<PAGE>
local or provincial wage, hour, breach of contract, or common or statutory law
relating to employment by the Sellers with respect to any of the Sellers'
employees; (b) any pending action, suit, investigation or proceeding at law, in
equity, in arbitration or by or before any authority or administrative agency
involving or affecting the Sellers, which concerns or relates to any of the
Sellers employees, independent contractors, consultants, or labor organizations;
(c) the employment by the Sellers of any employee or the retention by the
Sellers of any independent contractor; (d) salary, wages, commissions or
benefits, including pension benefits, under any Employee Benefit Plan or
Canadian Pension/Benefit Plan sponsored, or contributed to by the Sellers for
any and all of the Sellers' employees or (e) any of the Assumed Collective
Bargaining Agreements, including, but not limited to, withdrawal liability under
Section 4201 of ERISA. The Buyer shall provide prompt and full cooperation to
the Sellers, and to the counsel, agents and representatives of the Sellers, with
respect to access to any information, books, records or employees of the Buyers
in connection with any claim, demand, cause of action or proceeding assessed by
any party against the Sellers in connection with any Liability or obligation
retained by the Sellers pursuant to this Section 7.2.
SECTION 7.3. EMPLOYEE HEALTH AND WELFARE .
Except as provided in Sections 2.5 and 7.1, the Sellers shall retain
responsibility for and continue to pay all hospital, medical, life insurance,
disability and other Employee Welfare Benefit Plan and Canadian Pension/Benefit
Plan expenses and benefits, and for all United States and Canadian worker's
compensation, United States and Canadian unemployment compensation and other
United States and Canadian government mandated benefits (collectively referred
to herein as "Welfare Type Plans") for claims covered by such Welfare Type
Plans which are incurred by Transferred Employees and their dependents prior to
the Closing Date. The Buyer shall have responsibility for all Transferred
Employees (and their present or former dependents) with respect to claims
incurred on or after the Closing Date under all Welfare Type Plans or hospital,
medical, life insurance, disability and other welfare plans sponsored or funded
by the Buyer in Canada. For the purposes of this Section 7.3, claims shall be
deemed to have been incurred:
(i) with respect to all death or dismemberment claims, on the actual
date of death or dismemberment;
(ii) with respect to all disability or sickness claims, other than
short-term disability or salary continuance benefits, on the date the claimant
became disabled and was unable to perform his/her regular duties of employment
or to report for work;
(iii) with respect to short-term disability or salary continuance
claims, on each day for which income benefits are payable to the claimant;
(iv) with respect to all hospital, medical, drug or dental claims, on
the date the service or supply was purchased or received by the claimant; and
(v) with respect to United States and Canadian worker's compensation
claims, on the date the incident occurred.
-53-
<PAGE>
ARTICLE VIII.
TAXES
The parties hereto hereby covenant and agree as follows:
SECTION 8.1. TAXES RELATED TO PURCHASE OF ASSETS. (a) All state,
provincial and local sales, social services, transfer, goods and services,
transfer gains, excise, value-added or other similar Taxes, including, but not
limited to, all state, provincial and local Taxes in connection with the
transfer of the Purchased Assets and the assumption of the Assumed Liabilities,
and all recording and filing fees (collectively, "Transaction Taxes") that may
be imposed by reason of the sale, transfer, assignment and delivery of the
Purchased Assets (i) imposed by any Canadian Governmental Authority shall be
paid by the Buyer and (ii) imposed by any United States Governmental Authority
shall be paid by the Sellers. The Buyer and the Sellers agree to cooperate to
determine the amount of Transaction Taxes payable in connection with the
transactions contemplated by this Agreement. Transaction Taxes shall not include
any taxes for which the Sellers are responsible under Section 8.2. The Sellers
agree to assist the Buyer in the preparation and filing of, and, if necessary,
will execute, any and all required returns or elections (as expressly agreed
herein) for or with respect to such Transaction Taxes with any and all
appropriate taxing authorities.
(b) The Sellers shall provide to the Buyer such information as is
reasonably necessary to permit the Buyer to claim input tax credits, rebates and
refunds in respect of any such taxes paid by the Buyer. The Sellers who receive
this payment shall forthwith remit such amount as required by the Excise Tax Act
(Canada) (the "ETA") (and the equivalent in any Canadian province). The
provisions of this Section 8.1(b) shall survive the Closing.
SECTION 8.2. COOPERATION ON TAX MATTERS. The Buyer and the Sellers
agree to furnish or cause to be furnished to each other, as promptly as
practicable, such information and assistance relating to the Business as is
reasonably necessary for the preparation and filing of any return, claim for
refund or other required or optional filings relating to Tax matters, for the
preparation for and proof of facts during any Tax audit, for the preparation for
any Tax protest, for the prosecution or defense of any suit or other proceeding
relating to Tax matters and for the answer to any governmental or regulatory
inquiry relating to Tax matters.
The Buyer agrees to retain possession of all accounting, business,
financial and Tax records and information (i) relating to the Business in
existence on the Closing Date transferred to the Buyer hereunder and (ii) coming
into existence after the Closing Date which relate to the Business before the
Closing Date, for a period of at least six (6) years from the Closing Date or
for such longer period as may be required by applicable law. In addition, from
and after the Closing Date, the Buyer agrees that it will provide access to the
Sellers and their attorneys, accountants and other representatives (after
reasonable prior notice and during normal business hours and without charge), to
such personnel, books, records, documents and any or all other information
relating to the Business as the Sellers may reasonably deem necessary to
properly prepare for, file, prove, answer, prosecute and/or defend any such
return, filing, audit, protest, claim, suit, inquiry or other proceeding. Such
access shall include, without limitation,
-54-
<PAGE>
access to any computerized information retrieval systems relating to the
Business. The provisions of this Section 8.2 shall survive the Closing.
SECTION 8.3. ELECTION RE: ACCOUNTS RECEIVABLE. Livent and the Buyer
agree to make a joint election in the prescribed form under Section 22 of the
Income Tax Act (Canada) as to the sale of Accounts Receivable by Livent to the
Buyer hereunder and to designate in such an election an amount equal to the
portion of the Purchase Price allocated to such Accounts Receivable pursuant to
Section 2.8.
SECTION 8.4. SUBSECTION 20(24) ELECTION: If the Buyer so requests, the
Sellers and the Buyer shall execute a joint election under subsection 20(24) of
the Income Tax Act (Canada).
ARTICLE IX.
REAL PROPERTY MATTERS
SECTION 9.1. TITLE EXCEPTIONS.
(a) Reference is made to the title commitments with respect to the
Material Real Property attached hereto as Schedule 9.1(a) (the "Title
Commitments").
(b) In the event that at any time prior to Closing, the Buyer becomes
aware of any Title Defects, other than those listed on any Title Commitment, the
Buyer shall have five (5) Business Days from the date it first became aware of
such Title Defect to notify the Sellers of the same (together with any
documentation or other materials or information with respect thereto received by
the Buyer). If the Buyer does not give notice (together with the aforesaid
documentation, materials and information) to the Sellers within such time period
then the Buyer shall be deemed to have approved all such Title Defects (other
than Mandatory Cure Items) and shall accept title subject thereto (and all such
Title Defects (other than Mandatory Cure Items) shall be deemed to be Permitted
Closing Liens).
(c) In the event that, with respect to any parcel of Material Real
Property, there shall be any Title Defect that is a Mandatory Cure Item, then
the Sellers shall discharge from record such Title Defect (or cause Title
Company to omit such Title Defect from the applicable title commitment) at the
Sellers' sole cost and expense at or prior to Closing. If the Sellers fail to so
discharge from record (or cause the Title Company so to omit), at or prior to
Closing, all Mandatory Cure Items, then the Buyer, at its option, as its sole
and exclusive right and remedy, by written notice given to the Sellers within
three Business Days after the then scheduled Closing Date, shall elect to either
(i) take title to the Premises (including, without limitation, the Material Real
Property) subject to the Title Defects in question, in which case the Buyer
shall receive a credit against the Purchase Price in an amount equal to the
total amount necessary to discharge such Title Defect from record (or cause
Title Company to omit such Title Defect from the applicable title commitment),
and in such case this Agreement shall remain in full force and effect or (ii)
terminate this Agreement, in which case the Sellers shall direct the Deposit
Escrow Agent to refund the Deposit to the Buyer and the Sellers shall reimburse
the Buyer for the Buyer's reasonable, actual and documented out-of-pocket costs
and expenses incurred after
-55-
<PAGE>
February 1, 1999 in connection with this Agreement up to a maximum amount of
$500,000, and upon such refund this Agreement shall terminate and no party shall
have any further obligation hereunder except as may be explicitly specified
herein.
(d) In the event that, with respect to any parcel of Material Real
Property, there shall be any Title Defect that is not a Mandatory Cure Item,
then the Sellers shall have the following options: (i) to (x) remove or cure
same at the Sellers' sole cost and expense at or prior to the Closing or (y)
allow as a credit against the Purchase Price the lesser of (A) the diminution in
value of such parcel of Material Real Property resulting from such Title Defect
or (B) the agreed upon cost of curing such Title Defect, and, in such case this
Agreement shall remain in full force and effect, or (ii) notify the Buyer that
the Sellers do not elect any of the foregoing options, in which case the Buyer
shall have the right, exercisable by the giving of notice thereof by the Buyer
to the Sellers within three (3) days after the Sellers notify the Buyer that the
Sellers do not elect any of the foregoing options, to either (x) terminate this
Agreement in which case the Sellers shall direct the Deposit Escrow Agent to
refund the Deposit to the Buyer and Sellers shall reimburse the Buyer for the
Buyer's reasonable, actual and documented out-of-pocket costs and expenses
incurred after February 1, 1999 in connection with this Agreement up to a
maximum amount of $500,000 and upon such refund this Agreement shall terminate
and no party shall have any further obligation hereunder except as may be
explicitly specified herein or (y) take title to the Premises (including,
without limitation, the Material Real Property in question) subject to the Title
Defect(s) in question, in which case the Buyer shall not be entitled to any
credit against or reduction of the Purchase Price.
(e) If prior to Closing the Buyer and the Sellers shall have failed to
agree on the diminution in value attributable to a Title Defect or Violation or
the cost of curing a Title Defect or Violation, the same shall be finally
determined by arbitration in accordance with the provisions of Section 9.7
hereof.
(f) If, at the Closing, Title Defects exist which the Sellers are
required or elect to pay and/or discharge, the Sellers may use some or all of
the Purchase Price to satisfy the same, provided that the Sellers (a) shall
simultaneously deliver to the Buyer at the Closing instruments in recordable,
fileable or registrable, as applicable, form (or Order(s))sufficient to satisfy
and remove from record such Title Defects, together with the cost of recording
or filing said instruments or (b) except with respect to Mandatory Cure Items,
have made other arrangements with the Title Company to insure title to the
Material Real Property in question free of any such Title Defects (pursuant to
affirmative insurance reasonably satisfactory to the Buyer or otherwise). If the
Sellers request, the Buyer shall at the Closing make separate wire transfers of
funds (or shall cause the Title Company to make such transfers), aggregating not
more than the amount of the balance of the Purchase Price due at the Closing, to
facilitate the satisfaction of any such Title Defects. The existence of any such
Title Defects shall not be deemed "Title Defects" if the Sellers shall comply
with the foregoing requirements.
(g) The Sellers shall be entitled to reasonable adjournments of the
Closing, not to exceed sixty (60) days in the aggregate, to cure or cause the
removal of any Title Defects that it elects or is required to cure or remove.
Except as otherwise expressly set forth herein, the Sellers shall not under any
circumstance be required or obligated to cure or to cause the removal of any
-56-
<PAGE>
Title Defects or to expend or make any allowance of any moneys because of any
Title Defects, even though the Sellers may have attempted to cure the same or
may have obtained an extension or extensions of the date of Closing for such
purpose.
SECTION 9.2. VIOLATIONS.
In the event that there shall be any Violation that was recorded or
filed, as applicable, against any Material Real Property prior to the date
hereof with respect to which any Seller shall have received a Violation
Notification prior to the Closing and which is not a Permitted Closing Lien,
then Sellers shall have the following options: (i) to (x) discharge of record,
at or prior to the Closing, any such Violations at the Seller's sole cost and
expense, or (y) allow as a credit against the Purchase Price the agreed upon
cost of discharging such Violation of record (but without duplication of any
credit received by Buyer pursuant to Section 9.6 hereof), and in such case this
Agreement shall remain in full force and effect, or (ii) notify the Buyer that
the Sellers do not elect any of the foregoing options, in which case the Buyer
shall have the right, exercisable by the giving of notice thereof by the Buyer
to the Sellers within three (3) days after the Sellers notify the Buyer that the
Sellers do not elect any of the foregoing options, to either (x) terminate this
Agreement in which case the Sellers shall direct the Escrow Agent to refund the
Deposit to the Buyer and Sellers shall reimburse Buyer for Buyer's reasonable,
actual and documented out-of-pocket costs and expenses incurred after February
1, 1999 in connection with this Agreement up to a maximum amount of $500,000,
and upon such refund this Agreement shall terminate and no party shall have any
further obligation hereunder except as may be explicitly specified herein or (y)
take title to the Premises (including, without limitation, the Material Real
Property in question) subject to the Violations, in which case the Buyer shall
be entitled to a credit against the Purchase Price in an amount equal to
$100,000 minus the aggregate reasonable amount of funds spent, or expense
incurred, by Sellers in an effort to discharge Violations (but without
duplication of any credit received by Buyer pursuant to Section 9.6 hereof) from
and after the date of this Agreement. The foregoing notwithstanding, in the
event there are Violations affecting the Material Real Property with respect to
which Seller shall have received one or more Violation Notifications prior to
the Closing relating to one or more Violations that were recorded or filed, as
applicable, against the applicable parcel of Material Real Property prior to the
date hereof that may be discharged of record by the payment of monies of no more
than $100,000 in the aggregate, Seller at its option shall (x) discharge of
record all such Violations at or prior to Closing and/or (y) allow as a credit
against the Purchase Price the agreed upon cost of discharging such Violation of
record (but without duplication of any credit received by Buyer pursuant to
Section 9.6 hereof); provided that Seller shall be entitled to adjourn the
Closing Date for a period not to exceed sixty (60) days in the aggregate for the
purpose of attempting to cure any such Violations; provided further that Seller
shall in no event be required to discharge of record any Violations that are
caused by Buyer or Buyer's agents or employees. Except as otherwise expressly
provided in this Section 9.2, the Sellers shall not be required or obligated to
discharge of record any Violations or remove any notes or notices of Violations
and the Buyer shall be obligated to accept the Premises subject thereto (without
any credit against or a reduction in the Purchase Price).
-57-
<PAGE>
SECTION 9.3. CASUALTY AND CONDEMNATION.
(a) In the event of any damage or destruction by reason of any casualty
to the Improvements, or if there shall be any takings by condemnation, eminent
domain or expropriation of all or any portion of the Premises, this Agreement
shall remain in full force and effect, and the Sellers shall (i) in the case of
damage or destruction, at the Sellers' option, (x) repair or restore, at
Sellers' sole cost, the Premises so damaged or destroyed to substantially the
same condition existing prior to the damage or destruction or (y) pay over to
the Buyer at Closing any insurance proceeds (not including rent or business
interruption insurance with respect to the period prior to the Closing Date but
including rent or business interruption insurance proceeds, if any, with respect
to the period after the Closing Date) received by the Sellers prior to the
Closing Date in respect of such casualty and assign to the Buyer all of the
Sellers' right, title and interest in and to the remainder of such proceeds not
received by the Sellers as of the Closing Date, or (z) assign to the Buyer all
of the Sellers' right, title and interest in and to such proceeds with a
reduction in the Purchase Price equal to the amount of any applicable deductible
(and Seller will, at Buyer's cost and expense, reasonably cooperate with Buyer
in Buyer's efforts to attempt to collect such insurance proceeds from the
applicable insurance carrier), and (ii) in the case of condemnation, eminent
domain or expropriation, pay over to the Buyer all awards received by the
Sellers on account of such condemnation, eminent domain or expropriation prior
to the Closing Date or assign to the Buyer the Sellers' right to receive the
same, in either case net of the amounts reasonably expended or incurred by the
Sellers in repairing or restoring the Premises. Notwithstanding the foregoing,
if, after the date hereof but prior to the Closing, (x) one or more fire(s) or
other casualt(ies) occur which damages all or a part of the Improvements at the
Material Real Property and a third-party contractor selected by the Sellers and
reasonably acceptable to the Buyer estimates, in writing (a "Contractor
Estimate"), that the loss suffered with respect to such Improvements is equal to
or greater than (1) in the case of loss with respect to any Material Real
Property other than the Pantages Theater, $5,000,000 or (2) in the case of loss
with respect to the Pantages Theater, $2,000,000 or (y) one or more eminent
domain or expropriation proceedings with respect to any or all of the Material
Real Property are initiated and the value of the portion of the Material Real
Property taken equals or exceeds $5,000,000 as agreed upon by Sellers and Buyer
(or, in the absence of agreement, as determined by arbitration pursuant to
Section 9.7 hereof) then the Buyer may terminate this Agreement by giving
written notice thereof to the Sellers within ten (10) days after receiving such
Contractor Estimate or within ten (10) days after receiving written notice of
such taking, as the case may be, whereupon the Deposit shall be returned to the
Buyer and no party hereto shall have any further obligations hereunder other
than those that, pursuant to the express terms hereof, survive the termination
of this Agreement. If the Buyer fails to give such notice within such ten-day
period, then the parties hereto shall proceed to Closing and the provisions of
Section 9.3(a)(i)(y) or 9.3(a)(ii), as the case may be, shall be applicable. The
provisions of this Section 9.3 are intended to, and shall, supersede any
contrary provision of law, including but not limited to, New York General
Obligation Law Section 5-1311, and the parties hereby waive any contrary
provision of law, including but not limited to, New York General Obligation Law
Section 5-1311. The Sellers shall have the right to adjourn the Closing for such
period, not to exceed one hundred twenty (120) days, as the Sellers reasonably
deem necessary to allow the Sellers to settle any insurance claims or legal
actions; provided that Sellers shall not enter into any such
-58-
<PAGE>
settlement without the permission of the Buyer, which consent shall not be
unreasonably withheld or delayed.
(b) From and after the date hereof until the Closing Date, the Sellers
shall keep in full force and effect the casualty insurance policies they
currently maintain with respect to the Premises described on Schedule 4.11(o)
(or insurance policies that are, in all material respects comparable to the
casualty policies that the Sellers currently maintain with respect to the
Premises).
SECTION 9.4. CONDITION OF THE PROPERTIES. (a) The Buyer acknowledges
that it has examined each of the Premises and is familiar with the physical
condition thereof, and agrees to take them "as is" on the date hereof subject to
ordinary wear and tear and other changes thereto not prohibited by this
Agreement. Except as expressly set forth in this Agreement, the Buyer
acknowledges that the Sellers have not made and do not make any representation
as to the physical condition, layout, footage, rents, income, expenses,
operation or any other matter or thing affecting or relating to the Premises or
this Agreement, and that the Sellers' sole obligation hereunder with respect to
the Premises is to deliver the Premises on the date of Closing subject to the
Permitted Closing Liens.
(b) Except as expressly set forth in this Agreement, the schedules and
exhibits hereto, and the other Transaction Documents, and any certificate or
instrument delivered pursuant to the terms hereof or thereof, the Sellers make
no representations or warranties with respect to the Purchased Assets, the
Assumed Liabilities or conditions, including, with respect to the Purchased
Assets, any representation or warranty of merchantability, suitability or
fitness for a particular purpose, or quality as to the Purchased Assets, or any
part thereof, or as to the condition or workmanship thereof, or the absence of
any defects therein, whether latent or patent, including, but not limited to,
the physical nature, condition and state of repair of the Premises (including,
but not limited to, all matters relating to engineering, environmental and
asbestos concerns) and the state of title to any of the Purchased Assets. Except
as provided in this Agreement, the schedules and exhibits hereto, and the other
Transaction Documents, and any other certificate or instrument delivered
pursuant to the terms hereof or thereof, the Purchased Assets are to be conveyed
hereunder "AS IS" on the date hereof and in their present condition, subject to
(i) reasonable use, wear and tear between the date hereof and the Closing Date
(ii) changes to the Purchased Assets not prohibited under Article VI hereof, and
the Buyer shall rely upon its own examination thereof.
SECTION 9.5. SATISFACTION AND DISCHARGE; SURVIVAL. The acceptance by
the Buyer of the deeds and assignments referred to in Section 3.2 shall be
deemed to be an acknowledgment, for all purposes, of the full performance and
discharge of every representation, agreement and obligation on the part of the
Sellers to be performed by it pursuant to the provisions of this Agreement,
except for the provisions of this Agreement which are specifically stated to
survive the Closing.
SECTION 9.6. PERMANENT CERTIFICATE OF OCCUPANCY FOR NEW YORK THEATER
AND CERTIFICATE OF COMPLETION FOR CHICAGO THEATER. The Sellers shall use
commercially reasonable, diligent efforts to obtain, prior to Closing, a
permanent certificate of occupancy for
-59-
<PAGE>
the New York Theater (a "NYPCO") and a Certificate of Completion (as referenced
in Section 4.13 of the Redevelopment Agreement) for the Chicago Theater (the
"Chicago Certificate"); provided that in no event shall the Sellers be required
to (x) expend more than $400,000 in the aggregate in the exercise of such
efforts or (y) close either theater in connection with such efforts. If the
Sellers shall not obtain a NYPCO and the Chicago Certificate prior to Closing,
then the Buyer, as its sole remedy, shall receive a credit against the Initial
Cash Amount in the amount of $400,000 (less the aggregate amount reasonably
expended, or incurred, by the Sellers in the exercise of the efforts described
in the first sentence of this Section 9.6 (but without duplication of any credit
afforded the Sellers pursuant to Section 2.3 hereof in respect of such amount))
or such lesser amount as the Buyer, in good faith, shall determine the Buyer
will be required to expend in order to obtain a NYPCO and/or Chicago
Certificate, as applicable.
SECTION 9.7. ARBITRATION.
(a) With respect to any dispute, which under the express provisions of
this Article 9 provide for the dispute to be resolved pursuant to binding
arbitration, any party hereto may require that the dispute in question be
settled and finally determined by expedited arbitration. Any such arbitration
shall be held in New York County before a single arbitrator under the Expedited
Procedures provisions of the Commercial Arbitration Rules of the American
Arbitration Association ( AAA") (collectively, the "Arbitration Rules");
provided, however, that with respect to any such arbitration, the arbitrator
shall be a qualified, disinterested and impartial person who shall have had at
least five (5) years experience appropriate to the nature of the dispute being
arbitrated. The decision and award of the arbitrator shall be final and
conclusive on the parties and not subject to final judicial review.
(b) The arbitrator conducting any such arbitration shall be bound by
the provisions of this Agreement and shall not have the power to add to,
subtract from, or otherwise modify such provisions. The arbitrator shall
consider only the specific issues submitted for resolution. The parties to the
dispute in question agree to sign all documents and to do all other things
necessary to submit any such matter to arbitration and further agree to, and
hereby do, waive any and all rights they or either of them may at any time have
to revoke their agreement hereunder to submit to arbitration and to abide by the
decision rendered thereunder which shall be binding and conclusive on the
parties and shall constitute an "award" by the arbitrator within the meaning of
the AAA rules and applicable law. Judgment may be had on the decision and award
of the arbitrator so rendered in any court of competent jurisdiction. All
parties to such dispute shall have the right to appear and be represented by
legal counsel before the arbitrator and to submit such data and memoranda in
support of their respective positions in the matter in dispute as may be
reasonably necessary or appropriate in the circumstances. Each party shall pay
its own professional fees in connection with any arbitration. The costs of such
arbitration shall be split equally between the Sellers, on the one hand, and the
Buyer, on the other hand, unless the arbitrator determines otherwise.
(c) The following shall apply to the arbitration process discussed
above:
-60-
<PAGE>
(1) In rendering its decision, the arbitrator shall nave no power to
modify any of the provisions of, or enlarge or increase any of the monetary or
other obligations of any party under, this Agreement, and the jurisdiction of
the arbitrator is limited accordingly.
(2) The arbitrator shall give written notice to the parties stating its
determination, and shall furnish a signed copy of such determination to each
party.
SECTION 9.8. STRUCTURAL SUPPORT FOR PANTAGES THEATER.
(a) The parties hereto (i) acknowledge that the DRVS Land, which is
adjacent to the Land upon which the Pantages Theater is located, contains a
crater as a result of excavation with respect to the DRVS Land and (ii) have
been informed that (A) due to the fact that such crater has remained unfilled
for a period of time, there has been a shifting of soil between the crater and
the Pantages Theater ("Soil Shifting") and (B) if the crater were to remain
unfilled, and additional structural support were not provided to the Pantages
Theater, the structural integrity of the Pantages Theater might be at risk as a
result of continuing Soil Shifting.
(b) Promptly after the date hereof, the Engineering Consultant shall
ascertain the work that is necessary to provide structural support for the
Pantages Theater so that the structural integrity of the Pantages Theater will
not be adversely affected by future Soil Shifting (the "Structural Support
Work"). Subject to Section 9.8(c) below, Livent shall engage contractors
reasonably satisfactory to Livent and the Buyer (pursuant to documentation
reasonably acceptable to Livent and the Buyer (the "Support Work Documents")) to
cause the Structural Support Work to be performed, in accordance with applicable
law, at Livent's cost; provided that in no event shall Livent be required to
expend, or incur, more than $1,000,000 in the aggregate (the "Work Cap") in
order to fulfill its obligations under this subparagraph (b); provided further
that if the Structural Support Work will cost more than the Work Cap and Livent
does not elect to pay for such Structural Support Work, then Buyer shall be
entitled to terminate this Agreement by giving written notice thereof to Livent
within three business days after Livent notifies Buyer that Livent will not pay
such amounts.
(c) If the Structural Support Work is not completed prior to the
Closing, then (i) the Engineering Consultant shall estimate the cost of
completing the Structural Support Work (the "Structural Support Work Amount")
and funds in an amount equal to the lesser of (A) 1.5 multiplied by the
Structural Support Work Amount or (B) the excess of the Work Cap over the
aggregate amount expended or incurred by Livent in order to fulfill its
obligations under subparagraph (b) above (such lesser amount, the "Structural
Support Escrow Amount") shall be paid over to the Escrow Agent to be held
pursuant to the Escrow D Agreement, and shall be held and disbursed in
accordance with the provisions of Section 2.7(f) hereof and (ii) at the Closing,
Livent shall assign to Buyer the Support Work Documents and Buyer shall assume
Livent's obligations thereunder. If (x) the Structural Support Escrow Amount
shall be less than 1.5 multiplied by the Structural Support Work Amount and (y)
the amount that Livent shall actually pay over to the Escrow Agent pursuant to
the provisions of Section 2.7(f) hereof shall be less than 1.5 multiplied by the
Structural Support Work Amount, then Buyer shall be entitled to terminate this
Agreement by giving written thereof to Sellers on the Closing Date.
-61-
<PAGE>
(d) Livent shall grant to the Buyer all necessary temporary and
permanent easements of support and other easements as are necessary for the
Structural Support Work so that the structural integrity of the Pantages Theater
shall remain for its lifetime.
(e) The provisions of this Section 9.8 (together with the provisions of
Section 2.7(f) hereof) set forth Buyer's sole and exclusive rights and remedies
in respect of Soil Shifting.
ARTICLE X.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise expressly provided in this Agreement, all representations, warranties,
covenants and agreements (other than the representations and warranties of the
Sellers set forth in Sections 4.11(a) and 4.12, which shall not survive the
Closing) of the parties contained in either the Buyer Transaction Documents or
the Sellers' Transaction Documents shall survive the Closing, notwithstanding
any examination or investigation made by or for any party. Any claim, pursuant
to Article XI hereof, made in connection with this Section 10.1, must be
asserted, in writing pursuant to Section 15.7 hereof, within sixty (60) days
following the Closing Date in order to qualify as a valid claim subject to
indemnification.
ARTICLE XI.
INDEMNIFICATION
SECTION 11.1. ESCROW A FUND AND THE PUT OBLIGATION. Except as provided
in Section 2.3(f) with respect to Pre-Closing Losses, and notwithstanding
anything to the contrary in this Agreement, indemnification claims by the Buyer
pursuant to Article XI hereof shall be satisfied solely, at Buyer's option, (i)
from the Escrow A Funds and (ii) by offsetting the Put Amount, as provided
below, in an amount up to $8,000,000 plus the amount of any Pre-Closing Losses
(up to a maximum of $2,000,000 in Pre-Closing Losses). For purposes of this
Article XI, the value of such indemnification claim of the Buyer, to the extent
used to offset the Put Amount, shall be increased from the Closing Date to the
fifth anniversary of the Closing Date using an annual rate of 15%.
SECTION 11.2. INDEMNIFICATION BY THE SELLERS. The Sellers shall
indemnify and hold harmless the Buyer and its Affiliates, and each of their
respective directors, officers, employees, agents, representatives, stockholders
and controlling parties and all of their successors and assigns (collectively
the "Buyer Indemnified Parties" and individually a "Buyer Indemnified Party")
from and defend each of them from and against and will pay each the Buyer
Indemnified Party for any and all demands, claims, actions, liabilities, losses,
damages (including, without limitation, special, consequential and punitive
damages), costs and expenses (including, without limitation, interest,
penalties, costs of investigations and defense and any reasonable fees and
expenses of attorneys and other professionals), whether or not involving a third
party claim and without regard to any potential insurance recovery (other than,
to the extent
-62-
<PAGE>
applicable, title insurance (with respect to which (x) Buyer shall be required
to promptly make and diligently complete a claim before seeking redress against
the Sellers hereunder (provided, that, while diligently pursuing such claim, the
Buyer may file a claim against the Sellers for purposes of Section 10.1) and (y)
any recovery shall be offset against Sellers' liability hereunder))
(collectively, "Losses") asserted against, imposed upon or incurred by any such
the Buyer Indemnified Party, directly or indirectly, resulting from or arising
out of or in connection with or attributable to:
(a) any inaccuracy or breach of any representation or warranty of the
Sellers contained in any of the Sellers' Transaction Documents;
(b) any breach of any covenant, agreement or obligation of the Sellers
contained in any of the Sellers' Transaction Documents;
(c) any Liability of the Sellers that is not an Assumed Liability or
any other Liability of the Sellers arising out of events occurring, conditions
existing, or activities of the Sellers, as the case may be, after the Closing;
(d) noncompliance by the Sellers with any Law which results in
transferee liability on the Buyer or any of its Affiliates or the creation or
imposition of any Lien that is not a Permitted Closing Lien on any of the
Purchased Assets by virtue of such non-compliance; and
(e) any Taxes and Liens relating to Taxes that are not Permitted
Closing Liens and that are imposed on or incurred with respect to the Purchased
Assets or the Business for any period prior to the Closing Date;
provided, however, that the Sellers shall have no obligation under this Section
11.2 (i) unless such Losses (including any Pre-Closing Losses) in the aggregate
exceed Two Hundred Fifty Thousand Dollars ($250,000) and then only to the extent
such Losses (including any Pre-Closing Losses) exceed $250,000 and (ii) with
respect to any matter for which there is a purchase price adjustment pursuant to
Section 2.3 or 2.4 (but only to the extent of such adjustment).
Notwithstanding the provisions of Section 10.1 hereof, the Buyer shall
have a valid claim, subject to indemnification, for any actual fraud committed
by the Sellers in connection with the transactions contemplated herein and
therein for as long as such claims are not barred by applicable statutes of
limitations.
SECTION 11.3. INDEMNIFICATION BY THE BUYER. The Buyer shall indemnify
and hold harmless the Sellers and their Affiliates, and each of their respective
directors, officers, employees, agents, representatives, stockholders and
controlling parties and all of their successors and assigns (collectively, the
"Seller Indemnified Parties" and individually a "Seller Indemnified Party"),
from and defend each of them from and against and will pay to a Seller
Indemnified Party for any and all Losses asserted against, imposed upon or
incurred by any such Seller Indemnified Party, directly or indirectly resulting
from or arising out of or in connection with or attributable to:
-63-
<PAGE>
(a) any inaccuracy or breach of any representation or warranty of the
Buyer contained in any of the Buyer Transaction Documents;
(b) any breach of any covenant, agreement or obligation of the Buyer
contained in any of the Buyer Transaction Documents;
(c) except as described in Sections 11.3(d) and 11.3(e) hereof, any act
or omission by the Buyer after the Closing Date with respect to the ownership of
the Purchased Assets or the operation of the Business from and after the Closing
Date;
(d) any Assumed Liability; and
(e) any and all actions, suits, claims or legal, administrative,
arbitration, governmental or other proceedings or investigations against any
Seller Indemnified Party which solely relate to acts, events and occurrences
regarding the operation of the Business or the Purchased Assets following the
Closing Date and do not, in any way, relate to or arise out of the operations of
the Business or the use of Purchased Assets prior to the Closing Date or any
acts, events or occurrences prior to the Closing Date;
provided, however, that the Buyer shall have no obligation under this Section
11.3 unless such Losses in the aggregate exceed Two Hundred Fifty Thousand
Dollars ($250,000) and then only to the extent such Losses exceed $250,000.
Notwithstanding the provisions of Section 10.1 hereof, the Sellers
shall have a valid claim, subject to indemnification, for any actual fraud
committed by the Buyer and in connection with the transactions contemplated
herein and therein for as long as such claims are not barred by applicable
statutes of limitations.
SECTION 11.4. INDEMNIFICATION PROCEDURES - THIRD-PARTY CLAIMS. The
rights and obligations of a party claiming a right to indemnification hereunder
(each an "Indemnitee") from another party hereto (each an "Indemnitor") in any
way relating to a third party shall be governed by the following rules:
(a) The Indemnitee shall give prompt written notice to the Indemnitor
of the commencement of any Proceeding, or any threat thereof, or any state of
facts which Indemnitee determines will give rise to a claim by the Indemnitee
against the Indemnitor based on the indemnity agreements contained herein,
stating the nature and basis of the claim and the amount thereof, to the extent
known (a "Notice of Claim"). No failure to give a Notice of Claim shall affect
the indemnification obligations of an Indemnitor hereunder, except to the extent
such failure materially prejudices such Indemnitor's ability successfully to
defend the matter giving rise to the indemnification claim.
(b) In the event that an Indemnitee furnishes an Indemnitor with a
Notice of Claim, then upon the written acknowledgment by the Indemnitor given to
the Indemnitee within thirty (30) days of receipt of the Notice of Claim, that
the Indemnitor is undertaking and will prosecute the defense of the claim under
such indemnity agreements and confirming that the
-64-
<PAGE>
claim is one with respect to which the Indemnitor is obligated to indemnify and
hold harmless the Indemnitee hereunder and that the Indemnitor will be able to
pay the full amount of potential liability in connection with any such claim
(including, without limitation, any action, suit or proceeding and all
proceedings on appeal or for review which counsel for the Indemnitee shall deem
appropriate) (an "Indemnification Acknowledgment"), then the claim may be
defended by the Indemnitor; provided, however, that the Indemnitee is authorized
to file any motion, answer or other pleading that may be reasonably necessary or
appropriate to protect its interests prior to the Indemnitee receiving such
Indemnification Acknowledgment; provided such material answer or other pleading
is not materially prejudicial to the Indemnitor. However, in the event the
Indemnitor does not furnish an Indemnification Acknowledgment to the Indemnitor
or does not offer reasonable assurances to the Indemnitee as to Indemnitee's
financial capacity to satisfy any final judgment or settlement, the Indemnitee
may assume the defense and dispose of the claim, at the sole cost and expense of
the Indemnitor, upon thirty (30) days' prior written notice to the Indemnitor.
Notwithstanding receipt of an Indemnification Acknowledgment, the Indemnitee
shall have the right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be at the Indemnitee's own expense unless (A)
the employment of such counsel and the payment of such fees and expenses both
shall have been specifically authorized by the Indemnitor in connection with the
defense of such action, suit or proceeding or (B) the Indemnitee shall have
reasonably concluded, based upon the written advice of legal counsel, and
specifically notified the Indemnitor that there may be specific defenses
available to the Indemnitee which are different from or additional to those
available to the Indemnitor, in which case the costs and expenses incurred by
the Indemnitee shall be borne by the Indemnitor.
(c) The Indemnitee or the Indemnitor, as the case may be, who is
controlling the defense of the action, suit or proceeding, shall keep the other
fully informed of such claim, action, suit or proceeding at all stages thereof,
whether or not it is represented by counsel. The Indemnitor or the Indemnitee,
as the case may be, who is controlling the defense of the action, suit or
proceeding, shall, at it/his reasonable expense, make available to the other
party and the other party's attorneys and accountants all books and records of
the Indemnitor relating to such proceedings or litigation, and the parties
hereto agree to render to each other such assistance as they may reasonably
require of each other in order to ensure the proper and adequate defense of any
such action, suit or proceeding.
(d) The Indemnitor shall not settle any claim which Indemnitor has
undertaken to defend, without the Indemnitee's prior written consent (which
consent shall not be unreasonably withheld or delayed), unless the Indemnitor
fully indemnifies the Indemnitee for all Losses, the Indemnitee receives a
general and unconditional release with respect to such claims; there is no
finding or admission of violation of law by, or effect on any other claims that
may be made against the Indemnitee and the relief granted in connection
therewith requires no material action on the part of and has no material effect
on the Indemnitee or its business or reputation.
(e) Any claim made by the Buyer or the Sellers that may be made under
more than one subsection under Sections 11.2 or 11.3, respectively, may be made
under the subsection that the claiming party may elect in its sole discretion,
notwithstanding that such claim may be made under more than one subsection.
-65-
<PAGE>
SECTION 11.5. INDEMNIFICATION PROCEDURES -- OTHER CLAIMS. A claim for
indemnification for any matter not relating to a third-party claim may be
asserted by notice directly by the Indemnitee to the Indemnitor in accordance
with the provisions of Section 15.7 hereof.
SECTION 11.6. RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE OR
WAIVERS.
(a) The right to indemnification, payment of Losses or other remedy
based on any representation, warranty, covenant or obligation of a party
hereunder shall not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant or obligation.
(b) The waiver of any condition to a party's obligation to consummate
the transactions contemplated hereunder, where such condition is based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Losses or other remedy based on such representation,
warranty, covenant or obligation.
ARTICLE XII.
CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLERS
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date of the following conditions, any one or more of which may be waived
by the Sellers in their sole discretion:
SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF THE BUYER. All
representations and warranties made by the Buyer in this Agreement shall be true
and correct as of the date of this Agreement and on and as of the Closing Date
as if again made by the Buyer on and as of such date (except as to any
representation or warranty which specifically relates to an earlier date),
except for failures to be true and correct that would not reasonably be expected
to have a Buyer Material Adverse Effect, and the Sellers shall have received a
certificate dated the Closing Date and signed by the President, any Executive
Vice President or the Chief Financial Officer of the Buyer to that effect.
SECTION 12.2. PERFORMANCE OF THE OBLIGATIONS OF THE BUYER. The Buyer
shall, in all material respects, have performed all of its obligations and
agreements and complied with all of the covenants contained in this Agreement
and the Deposit Escrow Agreement to be performed and complied with by it on or
before the Closing Date, and the Sellers shall have received a certificate dated
the Closing Date and signed by the President, any Executive Vice President or
the Chief Financial Officer of the Buyer to that effect.
-66-
<PAGE>
SECTION 12.3. CONSENTS; HSR ACT.
(a) Other than the U.S. Bankruptcy Court's entry of the U.S. Order and
the Canadian Bankruptcy Court's entry of the Canadian Order which are addressed
in Section 12.6, all Consents required in connection with the execution,
delivery and performance of this Agreement (including, but not limited to, those
required under the ICA) but other than liquor licenses, shall have been duly
obtained and shall be in full force and effect on the Closing Date; and
(b) The applicable waiting period under the HSR Act shall have expired
or been terminated.
SECTION 12.4. LITIGATION. No Proceeding by any Governmental Authority
or any other Person shall have been instituted or threatened which (i) could
reasonably be expected to result in a Buyer Material Adverse Effect or could
reasonably be expected to materially impair, hinder or adversely affect the
ability of the Buyer to consummate the transactions contemplated hereby; (ii)
arises out of or relates to the Buyer Transaction Documents or the transactions
contemplated therein or (iii) questions the validity of the Buyer Transaction
Documents or the transactions contemplated therein or seeks to obtain
substantial damages in respect thereof.
SECTION 12.5. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other Order issued by any U.S. or Canadian court or other
governmental or regulatory authority, nor any U.S. or Canadian statute, rule,
regulation, decree or executive order promulgated or enacted by any U.S. or
Canadian governmental or regulatory authority that declares this Agreement
invalid or unenforceable in any respect or which prevents the consummation of
the transactions contemplated hereby shall be in effect.
SECTION 12.6. ENTRY OF THE ORDERS. (i) (A) The U.S. Bankruptcy Court
shall have entered the U.S. Order and the Canadian Bankruptcy Court shall have
entered the Canadian Order and (B) no order staying, reversing, or materially
modifying or amending the U.S. Order or the Canadian Order shall then be in
effect; and (ii) the U.S. Order, as entered by the U.S. Bankruptcy Court, and
the Canadian Order, as entered by the Canadian Bankruptcy Court, shall not
modify in any material respect the terms and conditions of this Agreement.
SECTION 12.7. ASSIGNMENT OF BANKRUPTCY CLAIM. Effective upon the
Closing under this Agreement, the Buyer hereby sells, assigns, transfers or
conveys to Livent, as agent for the Sellers, all rights, claim, demands,
credits, allowances and causes of action which the Buyer has against the Sellers
arising prior to the Petition Date. It is the intention of the parties that this
Section 12.7 be self-executing, however, the Buyer shall execute any additional
documentation reasonably requested by the Sellers to effectuate the provisions
of this Section 12.7.
SECTION 12.8. DUNDEE AGREEMENT. DRVS and Buyer shall have executed and
delivered the Dundee Agreement, and DRVS shall have executed and delivered the
Release of Reciprocal Agreement.
-67-
<PAGE>
SECTION 12.9. DELIVERY OF THE BUYER'S LEGAL OPINION AND OTHER CLOSING
DOCUMENTS. The Buyer shall deliver the opinion of Parker Chapin Flattau &
Klimpl, LLP, special U.S. counsel to the Buyer, as to the matters in form and
substance reasonably satisfactory to the Sellers. The Buyer shall duly execute
and deliver to the Sellers each of the Buyer's closing documents.
ARTICLE XIII.
CONDITIONS PRECEDENT TO THE PERFORMANCE BY THE BUYER
The obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing Date of the following conditions, any one or more of which may be waived
by the Buyer in its sole discretion:
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. All
representations and warranties made by the Sellers in this Agreement shall be
true and correct as of the date of this Agreement and on and as of the Closing
Date as if again made by the Sellers on and as of such date (except as to any
representation or warranty which specifically relates to an earlier date),
except as may be affected by actions taken in compliance with Section 6.1 and
except for failures to be true and correct that would not reasonably be expected
to have a Seller Material Adverse Effect, and the Buyer shall have received a
certificate dated the Closing Date and signed by the President or a Vice
President of each of the Sellers to that effect.
SECTION 13.2. PERFORMANCE OF THE OBLIGATIONS OF THE SELLERS. The
Sellers shall, in all material respects, have performed all obligations and
agreements and complied with all of the covenants contained in this Agreement
and the Deposit Escrow Agreement to be performed and complied with by them on or
before the Closing Date, and the Buyer shall have received a certificate dated
the Closing Date and signed by the President or a Vice President of each of the
Sellers to that effect.
SECTION 13.3. CONSENTS; HSR ACT.
(a) Other than the U.S. Bankruptcy Court's entry of the U.S. Order and
the Canadian Bankruptcy Court's entry of the Canadian Order which are addressed
in Section 13.7, all Required Consents required in connection with the
execution, delivery and performance of this Agreement (including, but not
limited to, those required under the ICA), shall have been duly obtained and
shall be in full force and effect on the Closing Date.
(b) The applicable waiting period under the HSR Act shall have expired
or been terminated.
(c) The Canadian Minister of Industry shall have notified the Buyer
that he is satisfied or is deemed to be satisfied that the acquisition of the
Purchased Assets is or is likely to be of net benefit to Canada pursuant to the
provisions of the ICA or the Buyer shall have received evidence, satisfactory to
it, indicating that the acquisition of the Purchased Assets is not a reviewable
investment under the ICA and such receipt or other evidence shall be in full
force and effect at Closing.
-68-
<PAGE>
SECTION 13.4. LITIGATION. No Proceeding by any Governmental Authority
or any other Person shall have been instituted or threatened which (i) could
reasonably be expected to result in a Seller Material Adverse Effect or could
reasonably be expected to materially impair, hinder or adversely affect the
ability of the Buyer to consummate the transactions contemplated hereby; (ii)
arises out of or relates to the Buyer Transaction Documents or the transactions
contemplated therein or (iii) questions the validity of the Buyer Transaction
Documents or the transactions contemplated therein or seeks to obtain
substantial damages in respect thereof.
SECTION 13.5. CURE OF DEFAULTS. The Sellers shall, on or prior to the
Closing, have cured any and all defaults under the Assumed Contracts which are
required to be cured under the U.S. Bankruptcy Code, so that such contracts may
be assumed by the Sellers and assigned to the Buyer in accordance with the
provisions of Section 365 of the U.S. Bankruptcy Code.
SECTION 13.6. NO VIOLATION OF ORDERS. No preliminary or permanent
injunction or other order issued by any U.S. or Canadian court or other
Governmental Authority, nor any U.S. or Canadian statute, rule, regulation,
decree or executive order promulgated or enacted by any U.S. or Canadian
Governmental Authority that declares this Agreement invalid or unenforceable in
any respect or which prevents the consummation of the transactions contemplated
hereby shall be in effect.
SECTION 13.7. ENTRY OF THE ORDERS. (i) (A) The U.S. Bankruptcy Court
shall have entered the U.S. Order and the Canadian Bankruptcy Court shall have
entered the Canadian Order (which (i) shall include, with respect to the
Pantages Theater, a certified copy of an Order of the Canadian Bankruptcy Court
and a vesting order containing a registrable legal description and (ii) shall
provide for the assignment of the Material Assumed Contracts by the Sellers to
the Buyer) and (B) no order staying, reversing, or materially modifying or
amending the U.S. Order or the Canadian Order shall then be in effect; and (ii)
the U.S. Order, as entered by the U.S. Bankruptcy Court, and the Canadian Order,
as entered by the Canadian Bankruptcy Court, shall not modify the terms and
conditions of this Agreement or the transactions contemplated hereby in such a
manner as results in a material diminution in the benefits of this Agreement to
the Buyer.
SECTION 13.8. BUYER'S TITLE COMPANY. The Buyer's Title Company shall be
willing, subject to the payment of applicable premiums, to issue to Buyer, title
insurance policies with respect to the Material Real Property insuring title as
marketable subject to the Permitted Closing Liens.
SECTION 13.9. PLANNING ACT. The Sellers shall have at their own cost
and expense, complied with the Planning Act (Ontario) in connection with the
transfer to the Buyer of any Purchased Real Property located in Ontario.
SECTION 13.10. DUNDEE AGREEMENT. DRVS and Livent shall have executed
and delivered the Dundee Agreement, and DRVS and Livent shall have executed and
delivered the Release of Reciprocal Agreement.
-69-
<PAGE>
SECTION 13.11. OPERATING CONDITION. None of the Pantages Theater,
Chicago Theater or New York Theater shall have been closed to the general public
for a period of thirty (30) or more consecutive days immediately preceding the
Closing Date solely as a result of a casualty, condemnation or revocation of a
permit or license required to be maintained by any Seller.
SECTION 13.12. DELIVERY OF THE SELLERS' LEGAL OPINIONS AND OTHER
CLOSING DOCUMENTS. The Sellers shall deliver the opinion of Willkie Farr &
Gallagher, special U.S. counsel to the Sellers, and of Stikeman, Elliott,
special Canadian counsel to the Sellers, as to the matters in form and substance
reasonably satisfactory to the Buyer. The Sellers shall duly execute and deliver
to the Buyer each of the Sellers' closing documents.
ARTICLE XIV.
TERMINATION
SECTION 14.1. CONDITIONS OF TERMINATION. Notwithstanding anything to
the contrary contained herein, this Agreement may be terminated at any time
before the Closing:
(a) By mutual consent of the Sellers and the Buyer;
(b) By the Buyer on or after September 30, 1999, if any condition
contained in Article XIII (other than Section 13.3(b)) has not been satisfied or
waived; provided, however, that the right to terminate this Agreement under this
Section 14.1(b) shall not be available to the Buyer if its failure to fulfill or
comply with any of its obligations under this Agreement shall have been the
reason that the Closing shall not have been consummated on or before said date;
(c) By the Sellers on or after September 30, 1999, if any condition
contained in Article XII (other than Sections 12.1, 12.2, 12.3(b) or 12.7) has
not been satisfied or waived; provided, however, that the right to terminate
this Agreement under this Section 14.1(c) shall not be available to the Sellers
if their failure to fulfill or comply with any of their obligations under this
Agreement shall have been the reason that the Closing shall not have been
consummated on or before said date;
(d) By the Buyer or the Sellers, if any U.S. or Canadian court or other
Governmental Authority has issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other action
has become final and non-appealable;
(e) By the Buyer or the Sellers, as applicable, on or after September
30, 1999, if the condition set forth in Section 13.3(b) and 12.3(b),
respectively, has not been satisfied or waived; provided, however, that the
right to terminate this Agreement under this Section 14.1(e) shall not be
available to the terminating party if its failure to fulfill or comply with any
of its obligations or conditions under this Agreement shall have been the reason
that the Closing shall not have been consummated on or before said date;
(f) By the Sellers, if the Buyer fails to fulfill any condition set
forth in Sections 12.1, 12.2 or 12.7, the Sellers provide the Buyer written
notice of such failure and the Buyer has
-70-
<PAGE>
failed within fifteen (15) days after such notice to have fulfilled such
condition or provide adequate assurance to the Sellers of the Buyer's ability to
fulfill such condition (provided, that the Sellers are not then in breach of the
terms of this Agreement);
(g) by either the Buyer or the Sellers, upon the Sellers entering into
any binding agreement with respect to an Alternative Transaction;
(h) by the Buyer pursuant to Section 6.6; or
(i) by the Buyer pursuant to Section 9.8(b) or (c).
If the Buyer or the Sellers terminate this Agreement pursuant to the
provisions hereof, such termination will be effected by written notice to the
other party specifying the provision hereof pursuant to which such termination
is made.
SECTION 14.2. EFFECT OF TERMINATION; REMEDIES.
(a) In the event of termination pursuant to Section 14.1, this
Agreement shall become null and void and have no effect (other than Articles XIV
and XV which shall survive termination), with no liability on the part of the
Sellers or the Buyer, or their respective directors, officers, employees, agents
or stockholders, with respect to this Agreement, except for (i) the liability of
a party for expenses pursuant to Section 15.4; and (ii) liability as provided
below in Section 14.2(b) and any other provision which, by its express terms,
survives the termination of this Agreement.
(b) If this Agreement is terminated:
(i) Pursuant to Sections 14.1(a), (d), (e) or (h), the Deposit,
together with the interest accrued thereon, shall be returned to the Buyer.
(ii) By the Buyer or the Sellers, as the case may be, pursuant to
Sections 14.1(b) or (c), the Buyer's sole and exclusive remedy shall be the
return of the Deposit to the Buyer, together with any interest accrued thereon
and the Sellers' reimbursement of the Buyer's reasonable and actual documented
out-of-pocket costs and expenses incurred after February 1, 1999 in connection
with this Agreement up to a maximum amount of $500,000.
(iii) By the Sellers pursuant to Section 14.1(f), the Sellers shall
have the right to the Deposit, together with any interest accrued thereon. Each
of the Sellers and the Buyer acknowledge that the damages that would arise from
the Buyer's failure to fulfill any condition set forth in Sections 12.1, 12.2 or
12.7 would be difficult or impossible to establish, and, accordingly, the
Sellers' rights and remedies shall be limited to the rights and remedies set
forth in the preceding sentence, which shall serve as liquidated damages.
(iv) By the Buyer or the Sellers, as the case may be, pursuant to
Section 14.1(g), the Buyer's sole and exclusive remedy shall be (a) the return
of the Deposit to the Buyer, together with any interest accrued thereon, (b) the
payment of a break-up fee of $2,250,000, which the Sellers shall cause the
Person(s) (other than the Sellers) to the Alternative Transaction to pay at
-71-
<PAGE>
the closing of such Alternative Transaction directly to the Buyer and (c) the
Sellers' reimbursement of the Buyer's reasonable and actual documented
out-of-pocket costs and expenses incurred after February 1, 1999 in connection
with this Agreement up to a maximum amount of $500,000.
(v) By the Buyer pursuant to Section 14.1(i), the Buyer's sole and
exclusive remedy shall be the return of the Deposit to the Buyer, together with
any interest accrued thereon and the Sellers' reimbursement of the Buyer's
reasonable and actual documented out-of-pocket costs and expenses incurred after
February 1, 1999 in connection with this Agreement up to a maximum amount of
$500,000.
ARTICLE XV.
MISCELLANEOUS
SECTION 15.1. DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND WARRANTIES;
SCHEDULES. Notwithstanding anything to the contrary contained in this Agreement,
the Sellers make no representation or warranty with respect to any matter
primarily relating to any of the Excluded Assets or Excluded Liabilities. In
addition, any item disclosed on any one schedule shall be deemed to be disclosed
on each schedule, where relevant. Disclosure of an item in any schedule shall
not be deemed to be an admission that such item is material.
SECTION 15.2. SUCCESSORS AND ASSIGNS. Except as otherwise provided in
this Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect. Notwithstanding the foregoing, the
Buyer shall have the right to assign its rights or obligations under this
Agreement or under any other Transaction Document, in whole or in part, to one
or more of its Affiliates or its and their successors in interest (including
designating one or more of its Affiliates as a transferee of all or any portion
of the Purchased Assets or Assumed Liabilities); provided that the Buyer shall
remain liable for its obligations under this Agreement and all other Transaction
Documents. This Agreement shall inure to the benefit of and shall be binding
upon the successors and permitted assigns of the parties hereto.
SECTION 15.3. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of New York (without giving effect to the principles of conflicts
of laws thereof), except to the extent that the laws of such state are
superseded by the U.S. Bankruptcy Code. For so long as the Sellers are subject
to the jurisdiction of the U.S. Bankruptcy Court, the parties hereto irrevocably
elect as the sole judicial forum for the adjudication of any matters arising
under or in connection with the Agreement, and consent to the exclusive
jurisdiction of, the U.S. Bankruptcy Court. After the Sellers are no longer
subject to the jurisdiction of the U.S. Bankruptcy Court, the parties hereto
irrevocably elect as the sole judicial forum for the adjudication of any matters
arising under or in connection with this Agreement, and consent to the
jurisdiction of, the courts of the County of New York, State of New York or of
the United States of America for the Southern District of New York and
irrevocably waive any right to contest the jurisdiction of such
-72-
<PAGE>
Courts or to assert that venue in such Courts would constitute an inconvenient
forum. In connection with any action, suit or other proceeding arising out of or
relating to this Agreement or any of the transactions contemplated hereby, the
parties unconditionally and irrevocably waive any right to a jury trial.
SECTION 15.4. EXPENSES. Except as otherwise provided herein, each of
the parties hereto shall pay its own expenses in connection with this Agreement
and the transactions contemplated hereby, including, but not limited to, any
legal and accounting fees, whether or not the transactions contemplated hereby
are consummated. Without limiting the generality of the foregoing, the Buyer
shall pay all expenses of or related to the issuance of the Buyer's policies of
title insurance (including, but not limited to, commitment fees, insurance
premiums, endorsement charges, search charges and survey charges).
SECTION 15.5. CURRENCY EXCHANGE. All payments, adjustment, escrow
funds, satisfaction of indemnification obligations, disbursements or expenses
provided for in the Transaction Documents or resulting from the transaction
contemplated therein shall be made or settled in United States Dollars. To the
extent such amounts exist in Canadian Dollars, they shall be converted to United
States Dollars at the mid-range exchange rate between such currencies published
in The Wall Street Journal on the date of payment.
SECTION 15.6. SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect by a court of competent jurisdiction, then to the maximum extent
permitted by applicable law, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other such
instrument. Furthermore, in lieu of any such invalid, illegal or unenforceable
term or provision, the parties hereto intend that there shall be added as a part
of this Agreement a provision as similar in terms and commercial effect to such
invalid, illegal or unenforceable provision as may be possible and be valid,
legal and enforceable. It is the intention to the parties that the terms and
provisions of this Agreement and any other Transaction Document shall be
enforced to the maximum extent permitted by applicable law.
SECTION 15.7. NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (i) on the date of service if served personally on the
party to whom notice is to be given; (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, and written
confirmation of receipt is obtained promptly after completion of transmission;
(iii) on the day after delivery to Federal Express or similar overnight courier
or the Express Mail service maintained by the United States Postal Service; or
(iv) on the fifth day after mailing, if mailed to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:
-73-
<PAGE>
If to the Sellers:
Livent Inc.
165 Avenue Road
Toronto, Ontario Canada M5R 3S4
Attn: Robert B. Webster
Telecopy: (416) 324-5520
Copies to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attn: Michael A. Schwartz, Esq.
Telecopy: (212) 728-8111
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attn: James E. Millstein, Esq.
Telecopy: (212) 225-3999
If to the Buyer:
SFX Entertainment, Inc.
650 Madison Avenue
New York, New York
Attn: Howard J. Tytel, Esq.
Executive Vice President and
General Counsel
Telecopy: (212) 753-3188
Copies to:
SFX Entertainment, Inc.
650 Madison Avenue
New York, New York
Attn: Richard Liese, Esq.
Senior Vice President and
Associate General Counsel
Telecopy: (212) 486-4830
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attn: Martin Eric Weisberg, Esq.
Telecopy: (212) 704-6288
-74-
<PAGE>
Any party may change its address or facsimile for the purpose of
receiving notices, requests, demands and other communications pursuant to this
Section 15.7 by giving the other parties written notice of its new address or
facsimile number in the manner set forth in this Section 15.7.
SECTION 15.8. AMENDMENTS; WAIVERS. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by all of
the parties hereto, or in the case of a waiver, by the party waiving compliance.
Any waiver by any party of any condition, or of the breach of any provision,
term, covenant, representation or warranty contained in this Agreement, in any
one or more instances, shall not be deemed to be nor construed as furthering or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
SECTION 15.9. PUBLIC ANNOUNCEMENTS. The parties agree that after the
signing of this Agreement, neither party shall make any press release or public
announcement concerning this transaction without the prior written approval of
the other party unless a press release or public announcement is required by Law
or order of the U.S. Bankruptcy Court or the Canadian Bankruptcy Court or
otherwise in connection with the administration of the Bankruptcy Cases. If any
such announcement or other disclosure is required by law or order of the U.S.
Bankruptcy Court or the Canadian Bankruptcy Court or otherwise in connection
with the administration of the Bankruptcy Cases, the disclosing party agrees to
give the nondisclosing party prior notice of, and an opportunity to comment on,
the proposed disclosure. The parties acknowledge that the Sellers shall file
this Agreement with the U.S. Bankruptcy Court and the Canadian Bankruptcy Court.
SECTION 15.10. ENTIRE AGREEMENT. The Access Agreement, Confidentiality
Agreement, this Agreement and the other Transaction Documents contain the entire
agreement and understanding between the parties hereto and thereto with respect
to the transactions contemplated hereby and thereby and supersede and replace
all prior and contemporaneous agreements and understandings, oral or written,
with regard to such transactions. All schedules and exhibits hereto and thereto
and any documents and instruments delivered pursuant to any provision hereto or
thereof are expressly made a part of this Agreement and the other Transaction
Documents as fully as though completely set forth herein or therein.
SECTION 15.11. PARTIES IN INTEREST. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this Agreement
on any Persons other than the Sellers and the Buyer and their respective
successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligations or liability of any third persons to the
Sellers or the Buyer. No provision of this Agreement shall give any third
persons any right of subrogation or action over or against the Sellers or the
Buyer.
SECTION 15.12. CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law will also
refer to all rules and regulations promulgated thereunder, unless
-75-
<PAGE>
the context requires otherwise. Unless the context otherwise requires: (a) a
term has the meaning assigned to it by this Agreement; (b) including means
"including but not limited to"; (c) "or" is disjunctive but not exclusive; (d)
words in the singular include the plural, and in the plural include the
singular; (e) provisions apply to successive events and transactions; and (f)
"dollars" or "$" means the currency of the United States of America.
SECTION 15.13. DESCRIPTIVE HEADINGS. The article, section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
SECTION 15.14. RECORDATION. Neither the Sellers nor the Buyer may
record this Agreement or any memorandum hereof. The Buyer hereby waives, to the
extent permitted by law, any right to file a lis pendens or other form of
attachment against any Premises in connection with this Agreement or the
transactions contemplated hereby. To the extent that any such filing is made in
violation of this Agreement, the Buyer shall indemnify the Sellers against any
damages incurred by the Sellers in connection therewith. The provisions of this
Section 15.14 shall survive the termination of this Agreement.
SECTION 15.15. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may
be executed in multiple counterparts and with facsimile signatures, each of
which shall be deemed an original, but all of which when taken together, shall
constitute the same instrument. A facsimile signature of this Agreement and any
other agreement, instrument or certificate delivered pursuant to, or in
connection with, this Agreement, shall be effective to bind the party so
executing this Agreement or such other agreement, instrument or certificate.
SECTION 15.16. BANKRUPTCY ORDERS. The reversal or modification on
appeal of either the U.S. Bankruptcy Order or the Canadian Bankruptcy Order
shall not affect the validity of or the authorization to consummate the
transactions provided for in this Agreement whether or not the Sellers and the
Buyer have knowledge of the appeal, unless the appellant has sought and obtained
a stay of the transaction either from the U.S. Bankruptcy Court or Canadian
Bankruptcy Court.
SECTION 15.17. CERTAIN DELIVERIES BY LIVENT. Certain deliveries to be
made by Livent under this Agreement and the other Transaction Documents will be
made by EY in its capacity as interim receiver for Livent.
-76-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
LIVENT INC.
By: /s/ Robert B. Webster
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
LIVENT INTERNATIONAL INC.
By: /s/ Daniel D. Brambilla
-------------------------------------
Name: Daniel D. Brambilla
Title:
LIVENT (U.S.) INC.
By: /s/ Robert B. Webster
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
LIVENT REALTY (NEW YORK) INC.
By: /s/ Robert B. Webster
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
LIVENT REALTY (CHICAGO) INC.
By: /s/ Robert B. Webster
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
SFX ENTERTAINMENT, INC.
By: /s/ Richard A. Liese
-------------------------------------
Name: Richard A. Liese
Title: Senior Vice President
-77-
<PAGE>
EXHIBIT C
PUT OBLIGATION AGREEMENT
PUT OBLIGATION AGREEMENT dated as of ___________, 1999 (this
"Agreement") by and between LIVENT (U.S.) INC. ("Livent"), a Delaware
corporation, as agent for the Sellers (as hereinafter defined), and SFX
ENTERTAINMENT, INC., a Delaware corporation ("SFX").
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to that certain Asset Purchase
Agreement dated as of May ___, 1999 (the "Asset Purchase Agreement") among
Livent, Livent International Inc., Livent, Inc., Livent Realty (New York) Inc.
and Livent Realty (Chicago) Inc. (collectively, the "Sellers") and SFX; and
WHEREAS, it is contemplated by the Asset Purchase Agreement that the
parties execute and deliver this Agreement; and
WHEREAS, the rights of Livent under this Agreement to exercise the Put
Right (as hereinafter defined) may be conveyed to a trustee (the "Trustee") of a
liquidating or similar trust pursuant to a confirmed Plan of Reorganization of
Livent and affiliate debtors in bankruptcy and, accordingly, in the event of
such conveyance, all references in this Agreement to Livent shall, in lieu
thereof, be deemed references to the Trustee;
NOW, THEREFORE, in consideration of the above premises and the mutual
agreements and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
<PAGE>
1. Put Right of Livent.
(a) (i) Subject to the terms and conditions of this Agreement,
Livent shall have the right (the "Put Right") to notify SFX in writing (each, an
"Exercise Notice"), from time to time until and including the last Exercise Date
(as hereinafter defined) or subsequent thereto pursuant to Section 1(a)(ii)
hereof in the case of any portion of the Put Right that then remains suspended,
that Livent desires to put to SFX all or a portion of an applicable Maximum
Unencumbered Amount or Suspension Amount with respect to any class of SFX Claim
(each as hereinafter defined) on an Exercise Date. Each Exercise Notice shall be
given in accordance with the terms of this Agreement not less than thirty (30)
days prior to the applicable Exercise Date, shall reasonably describe the
exercise (including the specific amount being exercised with respect to the
Maximum Unencumbered Amount and/or a class of the Suspension Amount) and shall
be irrevocable. Each exercise of a Put Right shall be in an amount not less than
Twenty-Five Thousand Dollars ($25,000) or an integral multiple thereof in excess
of Twenty-Five Thousand Dollars ($25,000), or, if less, the then entire
remaining amount of the Maximum Unencumbered Amount or particular class of
Suspension Amount. For purposes hereof, the term "Exercise Date" shall mean a
date which is the last day of the fifteenth full month following the date of
this Agreement and each of the next fifteen (15) three-month anniversaries of
the date thereof. Only one Exercise Notice may be given with respect to any
Exercise Date.
(ii) In the event all or any part of an SFX Claim shall not
have been resolved by the last Exercise Date then notwithstanding anything
herein to the contrary, Livent may exercise its Put Right under Section 1(c)
with respect to such SFX Claim on any three-month anniversary of the last
Exercise Date, until such SFX Claim is resolved.
(b) The amount for which Livent may exercise its Put Rights
pursuant to this Section 1(b) (the "Maximum Unencumbered Amount") on any
Exercise Date shall be the amount determined as follows:
-2-
<PAGE>
(i) subtract (A) the amount of claims asserted by SFX
(collectively, "SFX Claims") as of the initial Exercise Date, to the extent
resolved in favor of SFX or unresolved (but not for SFX Claims to the extent
resolved in favor of Livent) with respect to (x) Losses (as defined in the Asset
Purchase Agreement) for which the Buyer Indemnified Parties (as defined in the
Asset Purchase Agreement) in good faith believe they are entitled to be
indemnified pursuant to Article XI of the Asset Purchase Agreement, up to a
maximum amount of $8,000,000 (the "Indemnification Claims"), (y) to the extent
permitted by the Asset Purchase Agreement, the Pantages Naming Shortfall
(pursuant to, and as defined in, Section 2.7(e) of the Asset Purchase Agreement)
and (z) to the extent permitted by the Asset Purchase Agreement, the amount
necessary to complete the Structural Support Work (pursuant to, and as defined
in, Section 2.7(f) of the Asset Purchase Agreement) from (B) $17,401,186, and
add thereto interest at 15% per annum, compounded annually, from the date of
this Agreement to the payment date with respect to the Exercise Notice for which
this computation is being made;
(ii) subtract from the amount determined under clause (i),
with respect to each prior payment pursuant to the exercise of a Put Right under
this Section 1(b), an amount equal to the amount of such payment, plus interest
at 15% per annum, compounded annually, from the date of such payment to the
payment date with respect to the Exercise Notice for which this computation is
being made; and
(iii) add to the amount determined under clause (ii), with
respect to each SFX Claim, the amount of such claim resolved in favor of Livent
less any amount of such claim for which Livent shall have exercised its Put
Right under Section 1(c), plus interest on such difference at 15% per annum,
compounded annually, from the date of such resolution to the payment date with
respect to the Exercise Notice for which this computation is being made.
(c) (i) For purposes of this Agreement, the Suspension Amount with
respect to a class of SFX Claims on an Exercise Date is the amount of SFX Claims
which have not been resolved by the first Exercise Date with respect to such
class (but not more than $8,000,000 in the case of Indemnification Claims), plus
interest at 15% per annum, compounded
-3-
<PAGE>
annually, from the date of this Agreement to such Exercise Date, reduced as
provided below. The Suspension Amount with respect to a class shall be reduced
on each date of payment by the amount paid to an escrow agent as contemplated by
Section 1(c)(ii) in respect of an exercise by Livent of its Put Right under
Section 1(c). If an SFX Claim with respect to a class is resolved all or in part
in Livent's favor, the Suspension Amount with respect to such class shall be
reduced on the date of such resolution by the amount determined under Section
1(b)(iii) (without regard to Section 1(b)(i) or (ii)). If an SFX Claim with
respect to a class is resolved all or in part in SFX's favor, SFX shall be
entitled to receive an amount equal to the amount of such SFX Claim plus
interest from the date of this Agreement to the date of resolution of such SFX
Claim computed at a rate equal to the weighted average of the rate of return
earned on the escrowed amounts with respect to such class for the period such
amounts were held in escrow and 15% per annum, compounded annually, for the
period such amounts not held in escrow. Payment of any SFX Claim to the extent
resolved in favor of SFX shall be made first from the escrow account with
respect to the class of such SFX Claim and then by reducing the Suspension
Amount with respect to such class.
(ii) Livent shall be entitled to exercise a Put Right for an
amount up to the Suspension Amount with respect to a class prior to the time all
SFX Claims with respect to such class shall have been resolved among the parties
or through arbitration pursuant to the Asset Purchase Agreement. If the Put
Right is exercised as to a class of Suspension Amount, the amount of the Put
Right so exercised shall be paid to an escrow agent pending such resolution, and
any amounts so escrowed, together with any income thereon, shall be available to
pay SFX Claims of such class if and to the extent such claims are determined to
be valid. Once all SFX Claims of a particular class shall have been resolved and
any amounts payable to SFX in respect thereof shall have been paid, the
remainder of the escrow for such class of Suspension Amount shall be paid to
Livent.
(iii) The escrow agent shall be mutually acceptable to the
parties, and shall act pursuant to a mutually acceptable escrow agreement. The
escrowed funds shall be invested by the escrow agent in United States government
obligations of any agency of
-4-
<PAGE>
the United States government whose obligations are guaranteed by the full faith
and credit of the United States having maturities of less than twelve months, as
chosen by Livent.
(d) Livent shall not exercise its right with respect to any class
of Suspension Amount until it has exercised its put with respect to the Maximum
Unencumbered Amount with respect to the Exercise Date.
(e) The closing of each exercise of the Put Right by Livent shall
take place at the principal office of SFX on a date specified by SFX in a notice
given to Livent, which closing date shall be as promptly as is practicable
following the applicable Exercise Date and in no event later than thirty (30)
days following such Exercise Date. Subject to the terms and conditions of this
Agreement, at such closing, SFX shall pay to Livent or the escrow agent, by wire
transfer of immediately available funds, the then unpaid amount as to which
Livent shall have exercised its Put Right.
(f) SFX shall maintain on its books and records a schedule of the
Maximum Unencumbered Amount and Suspension Amount by class thereof, each
decrease and each increase thereof, each exercise of the Put Right and each
other transaction contemplated by this Agreement. At the request of Livent, SFX
shall provide to Livent copies of such schedule. Such books and records shall be
conclusive and binding on Livent absent manifest error.
2. Miscellaneous.
(a) Governing Law and Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
If any provision of this Agreement shall be declared invalid, unenforceable or
illegal by a court of competent jurisdiction, the remaining provisions hereof
shall not be affected thereby, shall remain valid, enforceable and legal and
shall continue in effect.
-5-
<PAGE>
(b) Consent to Jurisdiction and Service of Process. Any legal
action, suit or proceeding with respect to this Agreement or any matters arising
out of or in connection with this Agreement or otherwise, and any action for
enforcement of any judgment in respect thereof, shall be brought exclusively in
the courts of the State of New York located in New York County, or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, each of the parties hereby accepts, generally and
unconditionally, and unconditionally and irrevocably consents to the exclusive
jurisdiction of the aforesaid courts and appellate courts thereof. Each of SFX
and Livent irrevocably consents to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
overnight carrier or delivery service, to SFX or Livent at their respective
addresses referred to in Section 2(f) hereof. SFX and Livent each hereby
irrevocably waives any objection which it may now or hereafter have to the venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or otherwise brought in the courts referred to above and
hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of any party hereto to serve process in
any other manner permitted by law.
(c) No Waiver. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(d) Entire Agreement; Amendments. This Agreement, the Asset
Purchase Agreement and other Buyer Transaction Documents and Seller Transaction
Documents (as such terms are defined in the Asset Purchase Agreement) contain
the entire understanding and agreement of the parties with respect to the
subject matter hereof and thereof and they supersede
-6-
<PAGE>
all prior understandings and agreements (whether written or oral) with respect
to such subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth herein or therein. This Agreement may be amended only by a
written instrument duly executed by each of the parties hereto or their
respective successors or permitted assigns.
(e) Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning,
construction or interpretation of this Agreement.
(f) Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (i) on the date of service if served personally; (ii) on
the day of transmission if sent via facsimile transmission to the facsimile
number given below, and telephonic confirmation of receipt is obtained promptly
after completion of transmission; (iii) on the first business day after delivery
to Federal Express or similar overnight courier or the Express Mail service
maintained by the United States Postal Service, in each case for next business
day delivery; or (iv) on the fifth day after mailing, if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid and properly addressed, to the party as follows:
If to Livent:
Livent, Inc.
165 Avenue Road
Toronto, Ontario, Canada M5R 3S4
Attention: Robert B. Webster
Telecopy: (416) 324-5777
-7-
<PAGE>
Copies to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Michael A. Schwartz, Esq.
Telecopy: (212) 728-8111
and
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: James E. Millstein, Esq.
Telecopy: (212) 225-3999
If to SFX:
SFX Entertainment, Inc.
650 Madison Avenue, 16th Floor
New York, New York 10022
Attention: Howard J. Tytel, Esq.
Executive Vice President
and General Counsel
Telecopy: (212) 753-3188
and
Richard A. Liese, Esq.
Associate General Counsel
Telecopy: (212) 486-4830
With a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Martin Eric Weisberg, Esq.
Telecopy: (212) 704-6288
Any party may change its address for the purpose of this Section
by giving the other party written notice of its new address in the manner set
forth above.
-8-
<PAGE>
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which, when
taken together, shall be deemed one and the same Agreement.
(h) Binding Effect on Successor. This Agreement shall be binding
upon and inure to the benefit of SFX and its successors and assigns. Livent may
not assign or transfer any of its rights hereunder, except to the Trustee of a
Livent Bankruptcy Trust after giving notice thereof to SFX in accordance with
the provisions of paragraph 2(f) hereof.
(i) Capitalized Terms. Capitalized terms used in this
Agreement without definition shall have the same meanings herein as are ascribed
to such terms in the Asset Purchase Agreement.
(j) Inconsistent Provisions. To the extent any conflict or
inconsistency between any provision of this Agreement and any provision of the
Asset Purchase Agreement, the provisions of this Agreement shall control.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LIVENT (U.S.) INC.
By:
--------------------------------------
Name:
Title:
SFX ENTERTAINMENT, INC.
By:
--------------------------------------
Name:
Title:
-10-
<PAGE>
PUT EXERCISE NOTICE
SFX Entertainment, Inc.
650 Madison Avenue, 16th Floor
New York, New York 10022
Attention: Howard J. Tytel, Esq.
Executive Vice President
and General Counsel
Dear Sir:
The undersigned_______________, pursuant to the provisions of the Put Obligation
Agreement dated as of ____________, 1999 (the "Agreement"), by and between
Livent (U.S.) Inc., a Delaware corporation, and SFX Entertainment, Inc., a
Delaware corporation ("SFX"), hereby elects to put to SFX on ____________, being
an Exercise Date:
$_______ pursuant to Section 1(b) of the Agreement
$_______ pursuant to Section 1(c) of the Agreement with respect to
Indemnification Claims
$_______ pursuant to Section 1(c) of the Agreement with respect to Structural
Support Work Claims
Capitalized terms used herein without definition shall have the same meanings
herein as are ascribed to such terms in the Agreement.
Dated: By:
------------------------------- ------------------------------------
Name:
Title:
<PAGE>
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
This Amendment No. 1 to Asset Purchase Agreement, dated as of June 14,
1999, is made and entered into by and among Livent Inc., an Ontario corporation
("Livent"); Livent International Inc., a Barbados corporation ("Livent
International"); Livent (U.S.) Inc., a Delaware corporation ("Livent U.S.");
Livent Realty (New York) Inc., a Delaware corporation ("Livent N.Y."); Livent
Realty (Chicago) Inc., a Delaware corporation ("Livent Chicago," and together
with Livent, Livent International, Livent U.S. and Livent N.Y., collectively,
the "Sellers"); and SFX Entertainment, Inc., a Delaware corporation (the
"Buyer"). Capitalized terms used but not otherwise defined herein shall have the
meaning accorded such terms in the Purchase Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Sellers and the Buyer are party to that certain Asset
Purchase Agreement, dated as of May 28, 1999 ("Purchase Agreement");
WHEREAS, in accordance with Section 6.6 of the Purchase Agreement, the
Sellers have taken certain actions in connection with (i) the approval of the
Break-Up Fee Order by the U.S. Bankruptcy Court, (ii) the approval of the
Protocol by the U.S. Bankruptcy Court and the Canadian Bankruptcy Court and
(iii) obtaining the Canadian Approval;
WHEREAS, (i) the U.S. Bankruptcy Court has approved the Break-Up Fee
Order but with certain changes thereto, as set forth in Exhibit A hereto (the
"Final Break-Up Fee Order"), (ii) the Protocol has been approved by the U.S.
Bankruptcy Court and the Canadian Bankruptcy Court and (iii) the Canadian
Approval has been obtained; and
WHEREAS, the parties hereto desire to enter into certain amendments to
the Purchase Agreement in connection with the approval of the Final Break-Up Fee
Order and the Protocol and the obtaining of the Canadian Approval, as set forth
herein;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
1. The definition of "Break-Up Fee Order" is hereby amended and
restated to mean the Final Break-Up Fee Order, and Exhibit J, and all references
thereto, shall be deleted from the Purchase Agreement.
2. Section 6.6 of the Purchase Agreement is hereby amended and restated
in its entirety as follows:
SECTION 6.6 ALTERNATIVE TRANSACTION. The Sellers or their Affiliates,
or any of their respective officers, directors, employees or professionals
shall not initiate, solicit encourage or facilitate an Alternative
Transaction; provided that, if the Sellers receive any inquiry, proposal,
request for information or offer in connection with a proposed Alternative
<PAGE>
Transaction, the Sellers may provide information or participate in
discussions necessary to fulfill their fiduciary obligation (as advised by
counsel) to maximize the value of their estates; and provided, further, that
filing and serving any application or other pleading (including publication
of notice) seeking to approve this Agreement and the transactions
contemplated hereby with the U.S. Bankruptcy Court or the Canadian
Bankruptcy Court shall not constitute the solicitation of an Alternative
Transaction. The Sellers agree to provide promptly to the Buyer copies of
any written inquiries or written requests for information regarding an
Alternative Transaction (and any written response furnished by any of the
Sellers in response to any oral inquiry or request for information regarding
an Alternative Transaction) and any written bids or proposals for an
Alternative Transaction.
3. Section 6.8(a) of the Purchase Agreement is hereby amended to delete
the reference to the Break-Up Fee Order in clause (i) and to delete clause (ii)
in its entirety.
4. Section 14.1(h) of the Purchase Agreement is hereby deleted in its
entirety. Section 14.2(b)(i) is hereby amended to delete the reference therein
to Section 14.1(h).
5. Section 14.2(b)(iv) of the Purchase Agreement is hereby amended and
restated in its entirety as follows:
(iv) By the Buyer or the Sellers, as the case may be, pursuant to
Section 14.1(g), the Buyer's sole and exclusive remedy shall be (a) the
return of the Deposit to the Buyer, together with any interest accrued
thereon, (b) the payment of a break-up fee of $2,000,000, which the Sellers
shall cause the Person(s) (other than the Sellers) to the Alternative
Transaction to pay at the closing of such Alternative Transaction directly
to the Buyer and (c) the Sellers' reimbursement of the Buyer's reasonable
and actual documented out-of-pocket costs and expenses incurred after
February 1, 1999 in connection with this Agreement up to a maximum amount of
$500,000.
6. Except as expressly modified herein, all terms of the Purchase
Agreement shall remain in full force and effect.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 to Asset Purchase Agreement as of the date first above written.
LIVENT INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
LIVENT INTERNATIONAL INC.
By:
-------------------------------------
Name: Daniel D. Brambilla
Title:
LIVENT (U.S.) INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
LIVENT REALTY (NEW YORK) INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
LIVENT REALTY (CHICAGO) INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Executive Vice President
SFX ENTERTAINMENT, INC.
By:
-------------------------------------
Name: Richard A. Liese
Title: Senior Vice President
-3-
<PAGE>
AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT
This Amendment No. 2 to Asset Purchase Agreement, dated as of August 9,
1999 (this "Amendment"), is made and entered into by and among Livent Inc., an
Ontario corporation ("Livent"); Livent International Inc., a Barbados
corporation ("Livent International"); Livent (U.S.) Inc., a Delaware corporation
("Livent U.S."); Livent Realty (New York) Inc., a Delaware corporation ("Livent
N.Y."); Livent Realty (Chicago) Inc., a Delaware corporation ("Livent Chicago,"
and together with Livent, Livent International, Livent U.S. and Livent N.Y.,
collectively, the "Sellers"); and SFX Entertainment, Inc., a Delaware
corporation (the "Buyer"). Capitalized terms used but not otherwise defined
herein shall have the meaning accorded such terms in the Purchase Agreement (as
defined below).
W I T N E S S E T H:
WHEREAS, the Sellers and the Buyer are parties to that certain Asset
Purchase Agreement, dated as of May 28, 1999, as amended as of June 14, 1999 (as
so amended, the "Purchase Agreement");
WHEREAS, in accordance with Section 6.8 of the Purchase Agreement, the
Sellers have taken certain actions in connection with (i) the U.S. Bankruptcy
Court's entry of the U.S. Order, and (ii) the Canadian Bankruptcy Court's entry
of the Canadian Order;
WHEREAS, (i) the U.S. Bankruptcy Court has approved the U.S. Order with
certain changes thereto, as set forth in Exhibit A attached hereto (the "Final
U.S. Order"), and (ii) the Canadian Bankruptcy Court has approved the Canadian
Order with certain changes thereto, as set forth in Exhibit B attached hereto
(the "Final Canadian Order"); and
WHEREAS, the parties hereto desire to enter into certain amendments to
the Purchase Agreement in connection with the approval of the Final U.S. Order
and the Final Canadian Order and certain other matters, as set forth herein;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
1. The definition of "U.S. Order" is hereby amended and restated to
mean the Final U.S. Order, and Exhibit D, and all references thereto, are hereby
deleted from the Purchase Agreement.
2. The definition of "Canadian Order" is hereby amended and restated to
mean the Final Canadian Order, and Exhibit A, and all references thereto, are
hereby deleted from the Purchase Agreement.
3. The clause "the amount of $77,800,000 in cash (the "Initial Cash
Amount")," set forth in Section 2.2(a)(i) of the Purchase Agreement is hereby
amended and restated to state "the amount of $90,800,000 in cash (the "Initial
Cash Amount"),".
<PAGE>
4. The definition of "Warrants", and all references thereto, are hereby
deleted from the Purchase Agreement.
5. Exhibit E and Sections 2.7(g), 2.9, 3.3(d), 5.6, 6.8(d)(iii) and
6.10 of the Purchase Agreement, and all references thereto, are hereby deleted
from the Purchase Agreement in their entirety.
6. Exhibit G and Sections 3.2(i) and 3.3(g) of the Purchase Agreement,
and all references thereto and to the "Registration Rights Agreement", are
hereby deleted from the Purchase Agreement in their entirety.
7. Section 4.18 of the Purchase Agreement is hereby amended and
restated in its entirety as follows:
SECTION 4.18. INVESTMENT UNDERTAKING.
(a) Each Seller acknowledges that the Put Obligation will be a
"restricted security" within the meaning of Rule 144 promulgated under the
General Rules and Regulations of the Securities Act. Each Seller
acknowledges that it is acquiring the Put Obligation for the Seller's own
account and not with a view to its distribution within the meaning of
Section 2(11) of the Securities Act. Each Seller acknowledges that the
Seller understands that it must bear the economic risk of the investment
indefinitely because the Put Obligation may not be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities
Act and applicable state securities laws or an exemption from registration
is available.
(b) Each Seller is a sophisticated investor which either (i) has such
knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of its investment in the Put
Obligation being acquired hereunder, or (ii) has obtained independent
professional financial advice sufficient to enable it to evaluate the merits
and risks of its investment in the Put Obligation being acquired hereunder.
(c) The only Seller who will be issued the Put Obligation pursuant to a
trade (as such term is understood for the purposes of Canadian securities
laws) in Canada is Livent. The Put Obligation to be issued to Livent is to
be issued pursuant to the exemption set out in Section 72(1)(l) of the
Securities Act (Ontario) and Section 2.11 of Rule 45-501 of the Ontario
Securities Commission. Livent acknowledges that the assets being transferred
to the Buyer in consideration for the Put Obligation have a fair value of
not less than Canadian $150,000. Livent further acknowledges that the Put
Obligation to be issued to it will be subject to hold periods under Canadian
securities laws.
8. The form of the Put Obligation (Exhibit C to the Purchase Agreement)
is hereby amended by deleting the reference to "$17,401,186" in Section
(1)(b)(i) of the Put Obligation and substituting "$18,395,539" therefor.
9. Item 1 on Schedule 2.3(e) is hereby deleted and the following
substituted therefor:
-2-
<PAGE>
"1. Fosse/Chicago Tour $3,391,535".
10. This Amendment shall be construed, performed and enforced in
accordance with, and governed by, the laws of the State of New York (without
giving effect to the principles of conflicts of laws thereof), except to the
extent that the laws of such state are superseded by the U.S. Bankruptcy Code.
11. Except as expressly amended herein, all terms of the Purchase
Agreement shall remain in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 to Asset Purchase Agreement as of the date first above written.
LIVENT INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Chief Executive Officer
LIVENT INTERNATIONAL INC.
By:
-------------------------------------
Name: Daniel D. Brambilla
Title: Chief Operating Officer
LIVENT (U.S.) INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Chief Executive Officer
LIVENT REALTY (NEW YORK) INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Chief Executive Officer
LIVENT REALTY (CHICAGO) INC.
By:
-------------------------------------
Name: Robert B. Webster
Title: Chief Executive Officer
SFX ENTERTAINMENT, INC.
By:
-------------------------------------
Name: Richard A. Liese
Title: Senior Vice President
<PAGE>
DATED 1999
------------------
(1) ANITA and PAUL GREGG AND OTHERS
(2) SFX ENTERTAINMENT, INC.
----------------------------
SHARE PURCHASE AGREEMENT
-----------------------------
Baker & McKenzie
100 New Bridge Street
London EC4V 6JA
Telephone: (0171) 919 1000
Fax: (0171) 919 1999
Ref: TEDG/HG
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSES PAGES
- ------- -----
<S> <C>
1. Definitions and Interpretation....................................................................1
2. Sale of Sale Shares...............................................................................8
3. Consideration.....................................................................................9
4. Consideration Shares..............................................................................9
5. Condition and Completion.........................................................................15
6. Completion Accounts..............................................................................22
7. Adjustment of Consideration and Deferred Consideration...........................................23
8. Restriction of Vendors...........................................................................25
9. Warranties.......................................................................................27
10. Covenant in Respect of Tax.......................................................................35
11. Pensions.........................................................................................47
12. Indemnities......................................................................................49
13. estriction on Announcements and
Confidentiality of Information Received by the Vendors...........................................50
14. Costs............................................................................................50
15. General..........................................................................................51
16. Notices..........................................................................................52
17. Agent for Service................................................................................53
18. Governing Law and Submission to Jurisdiction.....................................................54
SCHEDULE 1
The Vendors......................................................................................55
SCHEDULE 2
Details of the Company...........................................................................56
SCHEDULE 3
The Subsidiaries.................................................................................57
SCHEDULE 4
Part 1...........................................................................................70
The Properties...................................................................................70
Part 2...........................................................................................79
Certificates of Title............................................................................79
SCHEDULE 5
Part 1...........................................................................................80
Completion Accounts..............................................................................80
Part 2...........................................................................................83
Working Capital Statement........................................................................83
SCHEDULE 6
Warranties.......................................................................................85
SCHEDULE 7
Part 1 Pension Warranties.......................................................................110
Part 2 Form of Deed of Amendment................................................................114
</TABLE>
<PAGE>
DATE: 1999
PARTIES:
(1) The persons whose names are set out in Column 1 of Schedule 1 (the
"Vendors").
(2) SFX ENTERTAINMENT, INC., a company incorporated in the state of
Delaware, United States of America whose principal place of business is
at 650 Madison Avenue, New York, NY 10022, United States of America
(the "Purchaser").
RECITALS:
(A) The Vendors are the registered holders and except as otherwise stated
herein beneficial owners of all of the issued shares in the capital of
Apollo Leisure Group Limited, particulars of which are set out in
Schedule 2.
(B) The Vendors wish to sell and the Purchaser wishes to purchase and
procure the purchase by a subsidiary of the Purchaser ("SFX UK") of the
said shares on the terms and conditions set out in this Agreement.
TERMS AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement where the context so admits the following words and
expressions shall have the following meanings:
"Accounting Date" 28 November 1998;
"Accounts" the audited consolidated financial statements
of the Company and of each of the Subsidiaries
for the accounting reference period which
ended on the Accounting Date (each such
financial statement comprising a balance
sheet, profit and loss account, cash flow
statement, notes and directors' and auditors'
report) and the consolidated profit and loss
account and consolidated balance sheet of the
Company and the Subsidiaries as at and for the
period ending on the Accounting Date copies of
which are annexed to the Disclosure Letter;
"Associates" any person, firm or company which is a
connected person (as defined in Section 839
Taxes Act) of the Vendors (or any of them), or
which is an associated company of the Vendors
(or any of them) within the meaning of Section
416 Taxes Act (but as if in sub-section (2) of
that Section there was substituted for the
words "the greater part" wherever they appear
the words "twenty five per cent or more");
1
<PAGE>
"Auditors" Smith Partnership;
"Barry Clayman Barry Clayman Corporation Limited, a company
Corporation" incorporated in England with registered number
3570610, whose registered office is at 144
Wigmore Street, London W1H 9FF;
"Certificates" the certificates of title in respect of the
properties that are listed in Part 2 of
Schedule 4;
"CAA" the Capital Allowances Act 1990;
"CCL" CCL Leisure Limited, a company incorporated in
England with registered number 2227126, whose
registered office is at Cardyn House,
Dingwall, Croydon, Surrey CR0 9XF;
"CCL Group" CCL and its subsidiary undertakings;
"Company" Apollo Leisure Group Limited, details of which
are set out in Schedule 2;
"Companies Acts" the Companies Act 1985 and the Companies Act
1989 and the former Companies Acts within the
meaning of Section 735(1)(c) of the Companies
Act 1985;
"Completion" completion of the sale and purchase of the
Sale Shares as specified in clauses 5.4 to
5.7;
"Completion Accounts" the consolidated balance sheet of the Group
prepared as at the Completion Accounts Date
and the consolidated profit and loss account
of the Group for the period from the
Accounting Date to the Completion Accounts
Date, to be prepared and agreed or determined
in accordance with the provisions of clause 6;
"Completion Accounts close of business on 7 August 1999 (except in
Date" relation to the CCL Group where the relevant
date will be the close of business on 1 August
1999) if Completion occurs prior to 20 August
1999 and close of business on 4 September 1999
(except in relation to the CCL Group where the
relevant date will be the close of business on
1 September 1999) if Completion occurs on or
after 20 August 1999;
"Completion Date" the sixth business day after the date on which
the Condition is satisfied, provided that if
the Completion Date would fall after 20 August
1999 Completion shall be deferred until 1
September 1999, or such later date as the
parties may agree;
"Condition" the condition set out in clause 5.2;
2
<PAGE>
"Confidential know-how, trade secrets and other information
Information" of a proprietary or confidential nature,
wherever in the world protectable;
"Consideration" the amount specified in clause 3.1;
"Consideration Shares" 979,667 shares of Class A common stock, par
value $0.01 per share, of the Purchaser,
forming the Share Consideration;
"Current Assets" the aggregate of the amount of the cash
balances as recorded in the books of the
Group, stock (consumables and goods for sale),
debtors, pre-payments, accrued income, assets
for resale and investments of the Group at the
Completion Accounts Dates as shown in the
Completion Accounts;
"Current Liabilities" the aggregate of the amount of bank
overdrafts, bank and other loans (falling due
within one year of Completion), hire purchase
creditors, trade creditors, corporation tax
(not including deferred taxation), other
taxation and social security creditors due
within one year of Completion, accruals and
deferred income (not including deferred grants
received) and other creditors of the Group at
the Completion Accounts Date falling due
within one year of Completion as shown in the
Completion Accounts;
"DCG Trustees" David Clifford Gregg, Suzanne Gregg and Simon
Paul Gregg as Trustees of the David Clifford
Gregg Accumulation and Maintenance Trust;
"DCR Trustees" David Charles Rogers, Julie Diane Rogers and
John Michael Cook as trustees of the David
Charles Rogers Interest in Possession
Settlement;
"Deferred Consideration" an amount equal to the amounts received by any
member of the Group on the sale of the
Deferred Consideration Properties which takes
place within 12 months of Completion as
adjusted for the aggregate amount (if any) of
the operating profit and loss made by the
business carried on at any such property
between the Completion Date and the date of
the sale of the relevant property but less:
(a) all associated reasonable selling costs;
(b) any corporation tax payable on the
associated chargeable gain as calculated
in accordance with the TCGA (except to
the extent that such gains
3
<PAGE>
may be deferred under roll-over relief
provisions);
(c) all reasonable costs expended on the
Deferred Consideration Properties
between the Completion Date and the date
of sale of the relevant property as
agreed between the parties, such
agreement not to be unreasonably
withheld; and
(d) an amount equal to the stamp duty (or
stamp duty reserve tax) paid by the
Purchaser (and not repaid) in respect of
the Sale Shares which would not have
been payable if this agreement had not
required the Deferred Consideration to
be paid;
"Deferred Consideration the assets described in paragraph (ii) of Part
Properties" 2 of Schedule 5;
"Directors" the persons listed as directors of the Company
in Schedule 2;
"Disclosure Letter" the letter of today's date from the Vendors to
the Purchaser in the approved terms;
"Employment Law" all and any laws, common law, statutes,
directives, recommendations, regulations,
notices, codes of practice, guidance notes,
judgements, decrees or orders, whether of the
European Community, the United Kingdom or such
other law as may be applicable, relating to or
connected with the employment of employees and
their health and safety at work or the use of
or engagement of temporary workers, agency
workers, contract workers or other workers
where the relationship is not one of
employment in their health and safety at work;
"Exchange Rate" the prevailing exchange rate applicable to the
amount of Sterling in relation to the US
dollar by reference to the middle-market rates
quoted by National Westminster Bank plc;
"Group" the group of companies comprising the Company,
its Subsidiaries, Barry Clayman Corporation
and Nederlander Dominion and the expression
"member of the Group" shall be construed
accordingly;
"Hazardous Substances" all substances of whatever description which
may cause or have a harmful effect on the
environment or the health of man or any other
living organism including, without limitation,
asbestos, petroleum, petroleum by products and
polychlorinated biphenyls and which in their
present state, condition and location would be
required to be removed by any competent
authority under the provisions
4
<PAGE>
of any United Kingdom, Irish laws or
legislation enacted at the Completion Date and
applying to the legal jurisdiction in which
the Properties are located or any regulations
made thereunder, including, for the avoidance
of doubt, under the powers introduced by
Section 57 and paragraphs 161 and 162 of
Schedule 22 of the Environment Act 1995;.
"IHTA" the Inheritance Tax Act 1984;
"Intellectual Property" includes Confidential Information, patents,
registered designs, copyrights, rights in
databases, design rights, topography rights,
trade marks, business names, registrations of
and applications to register any of the
aforesaid items, rights in the nature of any
of the aforesaid items in any country, rights
in the nature of unfair competition rights and
rights to sue for passing off, in each case
wherever in the world enforceable;
"Loan Notes" the loan notes guaranteed by HSBC or Royal
Bank of Scotland to be issued to the Vendors
by the Purchaser and SFX UK in the approved
terms;
"Loan Note the amount of seventy nine million two hundred
Consideration" and fifty thousand pounds ((pounds sterling)
79,250,000), as adjusted in accordance with
clause 7;
"Long Stop Date" 5:00pm on 6 September 1999 or such other date
as the parties may agree;
"Long Term Debt" the aggregate amount of bank loans and hire
purchase creditors due over one year
(including finance leases) of the Group
including, for the avoidance of doubt, the
provision for the purchase of the remaining
shares in CCL, at the Completion Accounts
Date, other than Current Liabilities, as shown
in the Completion Accounts;
"Medium Term Plan" the Apollo Leisure Group 5 Year Forecast dated
18 May 1999 included in the bundle of
documents annexed to the Disclosure Letter at
Volume 5, divider 1.4;
"Moral Rights" the rights of an author of a copyright
literary, dramatic, musical or artistic work
or a director of a copyright film ("Work") to
be identified as the author or director (as
the case may be) of the Work, not to have the
Work subjected to derogatory treatment and not
to have a Work falsely attributed to him as
the author or director (as the case may be),
and rights in the nature of the aforesaid
rights, in each case wherever in the world
enforceable;
5
<PAGE>
"Nederlander Dominion" Nederlander Dominion Limited, a company
incorporated in England with registered number
02583337 whose registered office is at Regina
House, 124 Finchley Road, London NW3 5JS;
"Non-Certificate those of the Properties which are not the
Properties" subject of the Certificates;
"Non-Certificate the information summary in respect of the
Property Summary" Non-Certificate Properties included in the
bundle of documents annexed to the Disclosure
Letter at volume 85;
"participating interest" the meaning defined in section 260 Companies
Act 1985;
"Planning Acts" the Town and Country Planning Act 1990, the
Planning (Listed Buildings and Conservation
Areas) Act 1990, the Planning (Hazardous
Substances) Act 1990, the Planning
(Consequential Provisions) Act 1990 and the
Planning and Compensation Act 1991 and the
Rules, Regulations and Orders made under them
or continued by them as they apply from time
to time;
"Properties" the properties, short particulars of which are
set out in part 1 of Schedule 4;
"Purchaser's
Accountants" Ernst & Young;
"Purchaser's Group" the group of companies comprising the
Purchaser and its subsidiary undertakings from
time to time, and the expression "member of
the Purchaser's Group" shall be construed
accordingly provided that this shall not
include the Group;
"Purchaser's Solicitors" Baker & McKenzie of 100 New Bridge Street,
London EC4V 6JA;
"Sale Shares" the 3,000,200 ordinary shares of(pound
sterling)1 each in the capital of the Company;
"SJS Trustees" Samuel John Shrouder and Frieda Shrouder as
trustees of the Samuel John Shrouder Interest
in Possession Trust;
"Share Consideration" the amount of twenty five million pounds
((pound sterling)25,000,000) to be satisfied
by the issue of the Consideration Shares;
"Subsidiaries" the subsidiaries and subsidiary undertakings
of the Company which are listed in Schedule 3;
"subsidiary undertaking" the meaning given to that term in section 258
Companies
6
<PAGE>
Act 1985;
"Tax" all forms of taxation, withholdings, duties,
imposts, levies, social security contributions
and rates imposed by any local, municipal,
governmental, state, federal, or other body in
the United Kingdom or elsewhere and any
interest, penalty, surcharge or fine in
connection therewith;
"Taxes Act" the Income and Corporation Taxes Act 1988;
"TCGA" the Taxation of Chargeable Gains Act 1992;
"Trusts" the David Clifford Gregg Accumulation and
Maintenance Trust, the David Charles Rogers
Interest in Possession Settlement and the
Samuel John Shrouder Interest in Possession
Trust;
"VATA" the Value Added Tax Act 1994;
"Vendors' Solicitors" Gouldens of 22 Tudor Street, London EC4Y 0JJ;
"Vendor Trustees" the DCG Trustees, the DCR Trustees and the SJS
Trustees;
"Warranties" the warranties and undertakings contained or
referred to in clause 9 and Schedule 6 and
part 1 of Schedule 7;
"Working Capital" Current Assets less Current Liabilities and
less Long Term Debt, as adjusted in accordance
with Schedule 5 and shown by the Completion
Accounts and the Working Capital Statement;
"Working Capital the statement showing the Working Capital as
Statement" extracted from the Completion Accounts,
prepared and agreed or determined in
accordance with the provisions of clause 6.
1.2 Save where the context otherwise requires words and phrases the
definitions of which are contained or referred to in Part XXVI of the
Companies Act 1985 shall be construed as having the meaning thereby
attributed to them.
1.3 Any references, express or implied, to statutes or statutory provisions
shall be construed as references to those statutes or provisions as
respectively amended or re-enacted or as their application is modified
from time to time by other provisions (whether before or after the date
hereof) and shall include any statutes or provisions of which they are
re-enactments (whether with or without modification) and any orders,
regulations, instruments or other subordinate legislation under the
relevant statute or statutory provision. References to sections of
consolidating legislation shall wherever necessary or appropriate in
the context be construed as including references to the sections of the
previous legislation from which the consolidating legislation has been
7
<PAGE>
prepared provided that none of the parties' liability will be increased
over and above that on the date of this Agreement.
1.4 References in this Agreement to clauses and schedules are to clauses in
and schedules to this Agreement (unless the context otherwise
requires). The recitals and schedules to this Agreement shall be deemed
to form part of this Agreement.
1.5 Headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.6 The expression "the Vendors" includes their respective personal
representatives and the expression "the Purchaser" includes its
successors and assigns.
1.7 References to "persons" shall include natural persons, bodies
corporate, unincorporated associations and partnerships (whether or not
having separate legal personality).
1.8 References to writing shall include any methods of reproducing words in
a legible and non-transitory form.
1.9 The masculine gender shall include the feminine and neuter and the
singular number shall include the plural and vice versa.
1.10 All warranties, representations, indemnities, covenants, agreements and
obligations given or entered into by more than one person are given or
entered into jointly and severally except as otherwise provided.
1.11 A document expressed to be "in the approved terms" means a document the
terms of which have been approved by or on behalf of the parties to
this Agreement and a copy of which has been signed for the purposes of
identification by or on behalf of those parties.
2. SALE OF SALE SHARES
2.1 Subject to the terms of this Agreement, each of the Vendors shall sell
with full title guarantee, except to the extent that the Vendor
Trustees do not own the beneficial interest in the Sale Shares set
opposite his or her name in Schedule 1, and the Purchaser shall
purchase and procure the purchase by SFX UK, free from all liens,
charges and encumbrances and together with all rights now or hereafter
attaching to them, including all rights to any dividend or other
distribution declared, made or paid after the date of this Agreement,
the number of Sale Shares set opposite his or her name in column 2 of
Schedule 1.
2.2 Each of the Vendors hereby waives and agrees to procure the waiver of
any restrictions on transfer (including pre-emption rights) which may
exist in relation to the Sale Shares, whether under the articles of
association of the Company or otherwise.
2.3 The covenants implied herein pursuant to the Law of Property
(Miscellaneous Provisions) Act 1994 ("LP(MP)A") shall apply as if the
covenant in section 3(1) of
8
<PAGE>
LP(MP)A ended after the word "parties" and as if section 6(2) of
LP(MP)A did not apply.
3. CONSIDERATION
3.1 The consideration payable for the Sale Shares shall be the aggregate of
the Share Consideration, the Deferred Consideration and the Loan Note
Consideration.
3.2 The Share Consideration shall be satisfied by the allotment and issue
of the Consideration Shares in accordance with clause 5.6.3, the Loan
Note Consideration shall be satisfied by the issue of Loan Notes in
accordance with clause 5.6.2 and the Deferred Consideration shall be
satisfied in accordance with clause 7.4.
4. CONSIDERATION SHARES
4.1 Unless otherwise agreed in writing by the Purchaser and provided that
such transferee agrees in writing to be subject to the provisions of
clauses 4 and 9.5, each of the Vendors agrees that he or she will not
offer, sell, pledge, encumber, transfer or otherwise dispose of any of
the Consideration Shares issued and allotted to him or her pursuant to
this Agreement (including any shares he or she receives as a result of
any stock splits, stock dividends, combinations of shares,
recapitalisations or other such events relating to the common stock of
the Purchaser which may occur at any time and from time to time from
and after Completion) or any interest therein during the period of one
year from the Completion Date (the "Non-Disposal Period") and
thereafter unless an exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), is
available or pursuant to an effective registration statement under the
Securities Act and pursuant to an exemption from any applicable United
States state securities or blue sky laws or an effective registration
or other qualification under any applicable United States state
securities or blue sky laws.
4.2 The Purchaser hereby agrees that Anita Kim Gregg and Paul Richard Gregg
shall be entitled to transfer the beneficial and/or legal interest in
their Consideration Shares to a corporate vehicle of their choice
incorporated in the Cayman Islands provided that the said transferee
agrees in writing to be subject to the provisions of clauses 4 and 9.5
and further provided that Paul Richard Gregg or a member of his
immediate family is and will continue to be the ultimate beneficial
owner of the corporate vehicle for the Non-Disposal Period in respect
of 60% of their Consideration Shares and the Option Period in respect
of the Option Shares (as such terms are defined below).
4.3 Each of the Vendors grants to the Purchaser an option (the "Option")
exercisable during the period of two years from the Completion Date
(the "Option Period") to acquire at US$45.31 per share (which price
shall be subject to appropriate adjustment in the event of any stock
splits, stock dividends, combinations of shares, recapitalisations or
other such events relating to the common stock of the Purchaser which
may occur at any time and from time to time from and after Completion),
the number of Consideration Shares that is equal to up to forty percent
(40%) of the Consideration Shares issued and allotted to each Vendor
pursuant to this Agreement (subject to appropriate adjustment in the
event of any stock splits, stock dividends, combinations of shares,
recapitalisations or other such events relating to the common
9
<PAGE>
stock of the Purchaser which may occur at any time and from time to
time from and after Completion) (the "Option Shares").
4.4 The Option shall be capable of exercise in whole or in part at any time
or times during the Option Period by service of notice in writing on
the Vendors provided that if the Purchaser does exercise its option in
part, it will treat all the Vendors equally and exercise the Option in
respect of the same proportional percentage of each Vendor's Option
Shares. Service of such notice shall constitute a legally binding
obligation of each of the Vendors to transfer, subject to the Vendors
receiving the consideration due in relation to such shares as set out
in clause 4.3, such number of Option Shares as is specified in the
notice to the Purchaser credited as fully paid with full title
guarantee and free and clear of all liens, charges and encumbrances.
The purchase price shall be payable to the Vendors' Solicitors in cash
within thirty (30) days of the exercise of the Option against delivery
of certificates for the Option Shares to be repurchased and the
Purchaser shall not be concerned to see to the distribution of the
monies so paid.
4.5 Notwithstanding any other provision of this clause 4 other than clause
4.2, whilst the Option remains exercisable in whole or in part, each of
the Vendors undertakes that he or she shall not offer, sell, pledge,
encumber, transfer or otherwise dispose of the Option Shares (including
any shares he or she receives as a result of any stock splits, stock
dividends, combinations of shares, recapitalisations or other such
events relating to the common stock of the Purchaser which may occur at
any time and from time to time from and after Completion) or any
interest therein unless otherwise agreed to in writing by the Purchaser
and provided that such transferee agrees in writing to be subject to
the provisions of this clause 4 and 9.5.
4.6 Each of the Vendors understands and acknowledges that:
4.6.1 the Consideration Shares are being distributed by the
Purchaser pursuant to the terms of Regulation S promulgated
under the Securities Act ("Regulation S"), which permits
securities to be sold to non-U.S. Persons in "offshore
transactions" (as defined in Regulation S), subject to certain
terms and conditions; and
4.6.2 the Consideration Shares have not been registered under the
Securities Act and may not be offered or sold in the United
States or to, or for the account or benefit of, any U.S.
Person (as defined in Regulation S) unless such securities are
registered under the Securities Act or such offer or sale is
made pursuant to an exemption from the registration
requirements of the Securities Act.
4.7 Each of the Vendors agrees that during the Non-Disposal Period, each of
the Vendors shall not engage in any activity for the purpose of, or
which may reasonably be expected to have the effect of, conditioning
the market in the United States for the Consideration Shares.
4.8 Each of the Vendors agrees that from the date hereof until the
expiration of the Non-Disposal Period he or she shall not with respect
to the Consideration Shares enter into any short sale, sell or purchase
any option or other derivative security, enter into any swap, or enter
into any other transaction which would have the effect of, directly or
indirectly, in whole or in part, hedging the economic or investment
risk of such
10
<PAGE>
Vendor's investment in the Consideration Shares. Each of the Vendors
represents that no such hedging position is currently in effect.
4.9 Each of the Vendors agrees that the certificates for the Consideration
Shares to be received shall bear the following legend:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or with any state securities commission,
and may not be offered, sold, pledged, transferred, encumbered
or disposed of by the holder except in accordance with the
provisions of Regulation S under the Securities Act, pursuant
to registration under the Securities Act, or pursuant to an
available exemption from registration; and that hedging
transactions involving those securities may not be conducted
unless in compliance with the Securities Act".
During the twelve month period following the Non-Disposal Period, the
Purchaser will cause the removal of such legend upon receipt of an
opinion of United States counsel, or other evidence, in form and
substance reasonably satisfactory to the Purchaser, to the effect that
the specified Consideration Shares may be sold in brokers transactions
under Rule 144. After the Option Period, upon request of any Vendor,
the Purchaser will cause the removal of such legend from any
Consideration Shares held by the Vendors.
In addition, each of the Vendors understands that the Purchaser's
transfer agents will not register any transfer of the Consideration
Shares during the Non-Disposal Period and the Option Period, as
applicable, and agrees that the Purchaser may place stop transfer
orders with its transfer agents with respect to such certificates.
4.10 Each of the Vendors agrees that certificates for the Consideration
Shares to be received on Completion shall bear the following legend in
addition to the legend set forth above for the duration of the
Non-Disposal Period in respect of all of his or her Consideration
Shares and the Option Period in respect of 40% of his or her
Consideration Shares, as applicable:
"In addition to and not in limitation of the restriction set
forth above, the Shares represented by this certificate shall
be subject to the terms of the Share Purchase Agreement dated
3 August 1999 between the shareholders of Apollo Leisure Group
Limited and SFX Entertainment, Inc. (the "Company") which
includes provisions affecting the free transferability of the
shares represented by this certificate. HOLDERS AND/OR
PROSPECTIVE PURCHASERS OR TRANSFEREES OF INTERESTS IN THESE
SHARES SHOULD BE AWARE THAT THE COMPANY, UNDER CERTAIN
CIRCUMSTANCES, WILL HAVE THE ABSOLUTE RIGHT, WITHOUT NOTICE TO
THE HOLDER, TO PREVENT THE TRANSFER OF OR CANCEL THE SHARES
REPRESENTED BY THIS CERTIFICATE ON THE BOOKS OF THE COMPANY."
Upon the request of a Vendor after the Option Period, the Purchaser
will cause the removal of such legend from any Consideration Shares
then held by the Vendors.
11
<PAGE>
4.11 Each of the Vendors acknowledges that the Consideration Shares will be
"restricted securities" as defined in Rule 144 under the Securities Act
and may be resold in the U.S. only after the Non-Disposal Period and
only pursuant to the requirements of Rule 144 or otherwise in reliance
upon an exemption from registration under the Securities Act.
4.12 Each of the Vendors hereby warrants and undertakes to and with the
Purchaser that:
4.12.1 he or she has downloaded to paper format from the internet
website maintained by the United States Securities and
Exchange Commission ("SEC") at http://www.sec.gov and reviewed
the most recent annual report to stockholders of the
Purchaser, the latest available annual report of the Purchaser
on Form 10-K, as amended; any of the Purchaser's quarterly
reports on Form 10-Q filed since such reports; any of the
Purchaser's filings on Form 8-K since such reports; and has
reviewed a statement of certain risk factors associated with
investment in the Consideration Shares as set out in the
Purchaser's Form 10-K, as amended (the "Risk Factors") and in
all cases consents to his or her receipt of such reports to
the extent received in this manner;
4.12.2 he or she was provided with the opportunity to ask questions
of and receive answers from the Purchaser or its
representative, concerning the operations, business and
financial condition of the Purchaser, and all such questions
have been answered to his or her full satisfaction and any
information necessary to verify such responses has been made
available to him or her;
4.12.3 he or she has received such documents, materials and
information as he or she deems necessary or appropriate for
evaluation of the Consideration Shares, and further confirms
that he or she has carefully read and understands these
materials and has made such further investigation as was
deemed appropriate to obtain additional information to verify
the accuracy of such materials;
4.12.4 he or she confirms that the Consideration Shares were not
offered to him or her by any means of general solicitation or
general advertising;
4.12.5 he or she confirms that he has such knowledge and experience
in financial and business matters so that he or she is capable
of evaluating the merits and risks of an investment in the
Consideration Shares and has the capacity to protect his or
her own interests, understands that such investment involves a
high degree of risk, has carefully considered the Risk Factors
before making his decision to make the investment and can bear
the entire economic risk of the investment;
4.12.6 he or she understands that there is no assurance that any
exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not
allow him or her to transfer all or any portion of the
Consideration Shares under the circumstances, in the amounts
or at the times he or she might propose;
12
<PAGE>
4.12.7 he or she will be acquiring the Consideration Shares for his
or her own account, for investment purposes only, and not with
a view towards the sale or other distribution thereof, in
whole or in part;
4.12.8 he or she understands that the Consideration Shares have not
been approved or disapproved by the SEC or by any other US
federal or state agency or any UK regulatory authority;
4.12.9 he or she understands that: (i) there are restrictions on the
transferability of the Consideration Shares; (ii) owners of
Consideration Shares have no right to require the
Consideration Shares to be registered under the Securities
Act; and (iii) it may not be possible for him or her to sell
his or her Consideration Shares and accordingly, he or she may
have to hold the Consideration Shares, and bear the entire
economic risk of this investment for an extended period of
time;
4.12.10 he or she is not a U.S. Person; he or she is executing such
undertaking outside the United States; he or she has received
no offer of the Consideration Shares in the United States; and
he or she has made no offer or order to purchase the
Consideration Shares in the United States; and
4.12.11 he or she has not relied upon any information or
representation with regard to the Purchaser or the
Consideration Shares apart from the information in clause
4.14.
4.13 The Purchaser shall prepare and submit to the New York Stock Exchange,
or such other national securities exchange on which the Purchaser's
Class A common stock is principally traded, a listing application
covering the Consideration Shares and shall use its commercially
reasonable efforts to obtain, prior to any permitted sale by a Vendor,
approval for the listing of such Consideration Shares subject to
official notice of issuance. The Vendors shall, without any expenditure
of funds, co-operate fully with the Purchaser with respect to such
listing and any filings made with the SEC by the Purchaser.
4.14 The Purchaser hereby warrants to each of the Vendors as follows:
4.14.1 The Purchaser is a corporation duly organised, validly
existing and in good standing under the laws of the state of
Delaware with full corporate power and corporate authority to
enter into this Agreement and each of the agreements
contemplated hereby to be executed by it and to perform its
obligations hereunder and thereunder.
4.14.2 This Agreement and all documents required to be executed and
delivered by the Purchaser hereunder at Completion have been
or will be duly authorised, executed and delivered on behalf
of the Purchaser. This Agreement and all agreements required
hereunder to be executed and delivered on behalf of the
Purchaser, constitute the legal, valid and binding obligations
of the Purchaser enforceable against it in accordance with
their respective terms, except that enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar
laws of general application affecting the enforceability of
creditors'
13
<PAGE>
rights generally or by general principles of equity (whether
applied by a court of law or equity). Neither the execution of
this Agreement or the consummation of the transactions
provided for herein will result in any breach of, acceleration
of, maturity of, or constitute any default under, except to
the extent waived, any indentures, mortgages, promissory
notes, contracts or agreements to which either the Purchaser
is a party or by which it or its properties are bound or will
cause it to violate any applicable legal requirements,
judgement, order or decree of any governmental authority or
any provision of the Certificate of Incorporation or bylaws of
the Purchaser.
4.14.3 The Purchaser has authorised capital stock of (a) 100,000,000
shares of Class A common stock, par value $0.01 per share, of
which 53,705,446 shares were issued and outstanding and no
shares were held as treasury stock as at close of business on
28 July 1999; (b) 10,000,000 shares of Class B common stock,
par value $0.01 per share, of which 2,545,557 were issued and
outstanding as at close of business on 28 July 1999 and (c)
25,000,000 shares of preferred stock, par value $0.01 per
share, of which no shares were issued and outstanding as of
the date hereof. All of the issued shares of common stock of
the Purchaser have been duly authorised and validly issued,
are fully paid and non-assessable and constitute the only
issued and outstanding voting capital shares of the Purchaser.
The Consideration Shares to be exchanged for the Sale Shares
will be issued out of authorised but unissued shares, and
there are no outstanding options, warrants, rights or calls
relating to the Consideration Shares, other than pursuant to
the terms of this Agreement.
4.14.4 Upon delivery of the Consideration Shares in exchange for the
Sale Shares, each of the Vendors will receive good title to
the Consideration Shares allocated to him or her, and the
Consideration Shares will upon issuance in accordance with
this Agreement all be duly authorised and validly issued,
fully paid and non-assessable, not issued in violation of the
pre-emptive rights or other rights of any other shares or
security holder of the Purchaser, free of any restrictions and
encumbrances imposed by the Purchaser except as otherwise
provided in this Agreement or by applicable law, free and
clear of all mortgages, pledges or security interests of
Purchaser and not subject to any agreements or understandings
among any persons with respect to the voting or transfer of
such shares, other than those to which the Vendors or any of
them become or are parties.
4.14.5 The Loan Notes have been or will be duly authorised for
issuance pursuant to this Agreement and, when issued and
delivered pursuant to the provisions of this Agreement, the
Loan Notes will be valid and binding obligations of the
Purchaser subject to bankruptcy, insolvency, moratorium or
other similar laws of general application affecting the
enforceability of creditors' rights generally or by general
principles of equity (whether applied by a court of law or
equity).
4.14.6 The Purchaser has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including material filed pursuant to Sections 13(a) or
14
<PAGE>
15(d) (collectively, the "SEC Documents"). As of their
respective dates, the SEC Documents were true, correct and
complete in all material respects in accordance with the
requirements of the Exchange Act and the SEC's regulations
thereunder, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.14.7 No broker or finder has been employed by the Purchaser in
consideration with the transactions contemplated hereby.
4.14.8 The Sale Shares that are to be acquired by the Purchaser are
being acquired for investment, for its own account and not
with a view to the resale thereof or any other transaction
which would constitute a "distribution" under the Securities
Act. The Purchaser acknowledges that the Sale Shares have not
been and will not be registered under the Securities Act or
any applicable US state securities or blue sky laws. The
Purchaser has the knowledge and experience in financial and
business matters such that it is capable of evaluating the
merits and risks of the investment by the Purchaser in the
Sale Shares. The Purchaser will not resell or otherwise
dispose of the Sale Shares that it acquires except pursuant to
an effective US registration statement or an exemption from
the registration requirements of the Securities Act and all
other applicable state securities and blue sky laws. The
Purchaser will not resell or otherwise dispose of the Sale
Shares that it acquires in any manner or transaction that will
make the Vendors unable to rely on the exemption from the
Securities Act and all applicable state securities and blue
sky laws on which the Vendors have relied in making the offer
and sale of the Sale Shares hereunder.
4.14.9 The Purchaser is an "accredited investor", as that term is
defined in Rule 501(a) under the Securities Act, and it has
such knowledge and experience in financial and business
matters as make it capable of evaluating the merits and risks
of its purchase of the Sale Shares upon the terms of this
Agreement.
4.14.10 In deciding to enter into and consummate the transactions
contemplated hereby, the Purchaser has relied, as to tax,
securities and other legal matters, on the advice it has
received from its own advisers and experts.
4.14.11 The Purchaser understands that there is no public trading
market for the Sale Shares.
5. CONDITION AND COMPLETION
5.1 From the date of this Agreement until Completion, the Vendors shall not
cause or permit any member of the Group to engage in any practice, take
or refrain from taking any action or enter or refrain from entering
into any transaction outside the ordinary course of business consistent
with prior practice (including with respect to quantity and frequency).
Without limiting the generality of the forgoing, the Vendors shall and
shall procure that each member of the Group shall, from the date of
this Agreement until Completion, subject to the written consent of the
Purchaser, such
15
<PAGE>
consent not to be unreasonably withheld or delayed and other than as
disclosed in the Disclosure Letter or otherwise contemplated by the
provisions of this Agreement:
5.1.1 operate the business of the Group only in the ordinary course
of business consistent with prior practice (including with
respect to quantity and frequency);
5.1.2 give the Purchaser and/or any persons authorised by it on
reasonable prior notice reasonable access to the premises and
access to all books, title deeds, records and accounts of the
Group as the Purchaser may reasonably request;
5.1.3 not intentionally or deliberately take any action other than
in the ordinary course of business that would have the effect
of increasing the amount of Working Capital for the purposes
of clause 7 or would result in an increased payment being made
to them under clause 10;
5.1.4 not enter into or vary any contract nor assume any liability
which is outside the ordinary or proper course of its business
or which is long term, unusual or onerous and, in this
context, "long term" means six (6) months or longer;
5.1.5 not enter into any capital commitment in a sum in excess of
(pounds sterling)250,000 (whether by way of purchase, lease,
hire purchase or otherwise);
5.1.6 not make any change in the nature, scope or organisation of
its business nor dispose of the whole of its undertaking or
property or a substantial part thereof;
5.1.7 not acquire or form any subsidiary nor acquire any shares in
any company nor acquire the whole or any substantial part of
the undertaking assets or business of any other company or any
firm or person or enter into any joint venture or partnership
with any other person;
5.1.8 not make any loans or grant any credit (other than credit
given in the normal course of trading and advances made to
employees against expenses incurred by them on its behalf);
5.1.9 not borrow any money (except borrowings under its existing
facilities and routine borrowings in the ordinary course of
business);
5.1.10 not enter into any guarantee, indemnity or surety;
5.1.11 other than artists and performers not employ or engage, or
make any offer of employment or engagement to, any employee or
consultant whose annual remuneration exceeds (pounds
sterling)50,000 or make any changes other than in the ordinary
course of business (whether immediate, conditional or
prospective) in the terms of employment (including, without
limitation, in the amount or basis of the emoluments or
benefits) of any of its employees or in any arrangements with
its consultants;
16
<PAGE>
5.1.12 not enter into any agreement, arrangement or understanding
with any trade union, works council, staff association or
other employee representative body in respect of any of the
employees or directors of the Company other than in the
ordinary course of business;
5.1.13 not acquire or dispose of or grant any option or right of
pre-emption in respect of any material asset or any interest
nor give nor receive any service otherwise than at market
value other than in the ordinary course of business;
5.1.14 not acquire or dispose of any freehold or leasehold property
or grant any lease or third party right in respect of any of
the Properties other than in the ordinary course of business;
5.1.15 not negotiate or agree any review of rent in respect of any
lease of any of the Properties in excess of (pounds
sterling)100,000 per annum;
5.1.16 not enter into any leasing, hire purchase agreement or any
agreement or arrangements for payment on deferred terms in
excess of (pounds sterling)100,000 per annum;
5.1.17 not grant or enter into any licence, franchise or other
agreement or arrangement concerning any part of its name,
trading names or know-how other than in respect of affinity
cards;
5.1.18 not declare, make or pay any dividend or distribution outside
the Group;
5.1.19 not knowingly permit any of its insurances to lapse or
knowingly do anything which would make any policy of insurance
void or voidable;
5.1.20 not apply for, surrender or agree any variations to any
permits or licences otherwise than in the ordinary course of
business; and
5.1.21 not agree, conditionally or otherwise, to do any of the
foregoing matters set out in clause 5.1.3 to 5.1.20 inclusive.
5.2 The sale and purchase of the Sale Shares is conditional upon the Inland
Revenue having given clearances for the proposed transaction under
Section 137 of the TCGA) and the Vendors shall use their best
endeavours to procure the clearance as soon as reasonably practicable
provided that if the said clearance is received such that the
Completion Date would fall after 20 August 1999, but before 1 September
1999, this Condition shall be deemed not to be satisfied until the date
falling six (6) business days ending on 1 September 1999. In the event
that the clearance is refused, the Vendors will enter into discussions
with the Purchaser in good faith to endeavour to obtain the same, but
subject to the clear understanding that they shall not be obliged to
change the commercial parameters of the transactions herein described
or to forego the tax treatment that they were expecting had the
clearance been given
5.3 The Vendors may waive the Condition at any time by notice in writing to
the Purchaser. In the event that the Condition is not fulfilled (or
waived pursuant to this clause) prior to the Long Stop Date then the
Vendors and the Purchaser shall not be bound to proceed with the sale
and purchase of the Sale Shares and this Agreement
17
<PAGE>
shall cease to be of any effect except clauses 1, 13, 14, 15, 16.1 to
16.6, 16.11, 17, 18 and 19 which shall remain in force and save in
respect of claims arising out of any antecedent breach of this
Agreement.
5.4 Subject to the provisions of clauses 5.2 and 5.3 above, Completion
shall take place on the Completion Date at the offices of the
Purchaser's Solicitors when all (but not some only) of the events
described in clauses 5.5 and 5.6 shall occur.
5.5 The Vendors shall:
5.5.1 deliver to the Purchaser:
5.5.1.1 duly executed transfers of all of the Sale Shares in
favour of the Purchaser or its nominees together with
the relative share certificates or an indemnity in
the approved terms;
5.5.1.2 duly executed transfers in favour of the Company (or
its nominees) of such shares in the Subsidiaries as
are registered in the names of nominee holders,
together with the relative share certificates or an
indemnity in the approved terms;
5.5.1.3 such waivers or consents as the Purchaser may require
to enable the Purchaser or its nominees to be
registered as holders of any of the Sale Shares and
the shares in the Subsidiaries which are referred to
in clause 5.5.1.2;
5.5.1.4 the resignation of Deloitte and Touche as Auditors of
each member of the Group (where such is the case),
such resignation to contain a statement in accordance
with Section 394 of the Companies Act 1985 that there
are no circumstances connected with it ceasing to
hold office which they consider should be brought to
the attention of the members or creditors of the
relevant Group Member;
5.5.1.5 written undertakings from edge ellison, Morgan Cole
Solicitors and Brodies to hold the title deeds to the
Properties that are in their possession to the order
of the Purchaser (other than any for which an
undertaking has already been given to a bank or other
lending institution) and a statutory declaration for
the lost title deeds for the Palladium Buildings,
Blackpool and a defective title indemnity policy to
cover any defects in title which result from the loss
of such title deeds and confirmation from Holohan
Associates that they hold the title deeds to The
Point in Dublin;
5.5.1.6 the statutory and other books (duly written up to
date) of Point Exhibition Company Limited and its
certificate of incorporation, common seal and any
other papers and documents of it and a written
undertaking from the Smith Partnership that they hold
all the statutory and other books (duly written up to
date) of the Company and the Subsidiaries and their
respective certificates of incorporation, common
seals and any other papers and documents of the
Company or the
18
<PAGE>
Subsidiaries (other than those Subsidiaries expressly
referred to in paragraph 1(b) of the Disclosure
Letter);
5.5.1.7 an unconditional letter of release from the bankers
of the Company and the Subsidiaries evidencing the
release and discharge of all guarantees and charges
granted by the Company and the Subsidiaries or, to
the extent that such guarantees and charges are not
to be released and/or discharged, letters of consent
to the change of control of the Group from the
relevant banks including Woodchester and HSBC and a
letter of non-crystallisation from HSBC;
5.5.1.8 certified copies of any powers of attorney under
which any of the documents referred to in this clause
5.5 is executed or evidence reasonably satisfactory
to the Purchaser of the authority of any person
signing on the Vendor(s) behalf;
5.5.1.9 the duly executed powers of attorney in respect of
the Sale Shares which are referred to in clause 16.9;
5.5.1.10 except in relation to David Rogers, letters of
resignation in the approved terms from each of the
Directors and the secretary of the Company and the
directors and secretary of each of the Subsidiaries
other than in relation to the CCL Group, Nederlander
Dominion and The Point Exhibition Company Limited,
such resignations to take effect in accordance with
the minutes of the meetings referred to in clauses
5.5.5 and 5.5.6 below;
5.5.1.11 duly executed deeds of release, in the approved
terms, terminating the licence in favour of Boars
Hill Heath and releasing and discharging the Company
and the Subsidiaries from any liability whatsoever
(whether actual or contingent) which may be owing to
the Vendors, John Jarvis or any of their respective
Associates (other than in relation to remuneration
and emoluments accrued but not yet paid and unpaid
expenses properly payable to the Vendors and John
Jarvis or any of their Associates pursuant to their
terms of employment with the relevant member of the
Group at Completion) including, for the avoidance of
doubt, any and all bonus payments, finder's fees,
claims, demands, proceedings, causes of action,
awards, decisions, injunctions, judgements, orders,
rulings, subpoenas, verdicts, obligations, contracts,
agreements, debts and liabilities whatsoever, whether
in law or equity (including any right of
contribution), whether arising under contract or
arrangement, by operation of law or otherwise,
existing or arising from any acts or events occurring
or failing to occur, or alleged to have occurred or
to have failed to occur, or any conditions existing
or alleged to have existed on or before Completion;
5.5.1.12 a letter from Sheffield International Venues
confirming that they consent to the change of control
of the Company;
19
<PAGE>
5.5.1.13 evidence to the Purchaser's reasonable satisfaction
that Barry Clayman Corporation is beneficially owned
by a member of the Group; and
5.5.1.14 evidence that the lease of the Alexandra Theatre
Birmingham has been duly stamped.
5.5.2 pay and shall procure that their respective Associates shall
pay all monies (if any) then owing by them to each member of
the Group, whether due for payment or not;
5.5.3 procure that Paul Richard Gregg, John Jarvis, David Charles
Rogers and Samuel John Shrouder shall enter into service
agreements (or a consultancy agreement in the case of John
Jarvis) with the Company or, in respect of Paul Richard Gregg,
a member of the Purchaser's Group incorporated outside the
United Kingdom, in the approved terms and procure that Barry
Clayman shall enter into a service agreement with Barry
Clayman Corporation Limited in the approved terms;
5.5.4 procure that the amounts set out in the board minutes referred
to in clauses 5.5.5 and 5.5.6 shall be paid to Paul Richard
Gregg, John Jarvis, Steve Lavelle, Nigel Brewster, Mike
Adamson, Terry Carnes, Jerry Tate, Paul Latham, Anita Kim
Gregg, Simon Paul Gregg and David Clifford Gregg and to all
staff of the Group;
5.5.5 cause the Directors to hold a meeting of the board of the
Company at which the Directors shall pass resolutions (inter
alia) to:
5.5.5.1 approve the registration of the Purchaser or its
nominees as members of the Company subject only to
the production of duly stamped and completed
transfers in respect of the Sale Shares;
5.5.5.2 appoint the Purchaser's Accountants as joint auditors
of the Company;
5.5.5.3 appoint such persons as the Purchaser may nominate as
directors and secretary of the Company;
5.5.5.4 approve all financial assistance being given by the
Company; and
5.5.5.5 give authority to such persons as the Purchaser may
nominate to operate the bank accounts.
5.5.6 cause the directors of the Subsidiaries to hold meetings of
the board of the Subsidiaries at which the directors of the
Subsidiaries shall pass resolutions (inter alia) to:
5.5.6.1 appoint such persons as the Purchaser may nominate as
directors and secretary of the Subsidiaries; and
5.5.6.2 appoint the Purchaser's Accountants as joint auditors
of the Subsidiaries;
20
<PAGE>
5.5.6.3 approve all financial assistance being given by the
Subsidiaries; and
5.5.6.4 give authority to such persons as the Purchaser may
nominate to operate the bank accounts.
5.6 The Purchaser shall:
5.6.1 subscribe or shall procure that SFX UK shall subscribe in cash
nine million pounds ((pounds sterling)9,000,000) for ordinary
shares in the Company;
5.6.2 issue and deliver and procure that SFX UK issue and deliver to
each of the Vendors Loan Notes in the amounts set out opposite
his or her name in column 4 of Schedule 1;
5.6.3 issue and allot to the Vendors the respective number of
Consideration Shares as set out opposite his or her name in
column 3 of Schedule 1; and
5.6.4 provide a letter of support in the approved terms.
5.7 Each of the Vendors hereby agrees to the allocation of the Loan Notes
and the Consideration Shares as is set out in columns 3 and 4 of
Schedule 1.
5.8 Without prejudice to any other remedies available to the Vendors or the
Purchaser, if in any respect the provisions of clauses 5.5 to 5.7
inclusive are not complied with by any of the Vendors or the Purchaser
(as the case may be) on the Completion Date the party not in default
may:
5.8.1 defer Completion to a date not more than 28 days after the
Completion Date (and so that the provisions of this clause 5.8
shall apply to Completion as so deferred); or
5.8.2 proceed to Completion so far as practicable (without prejudice
to its rights under this Agreement); or
5.8.3 save in relation to a breach of clauses 5.5.1.7, 5.5.1.12 and
5.5.1.14, rescind this Agreement;
provided that, if the Purchaser is not able to comply with its
obligations under clause 5.6 and the Vendors are able to comply with
their obligations under clauses 5.5 and 5.7 and rescind this Agreement,
the Purchaser shall reimburse the Vendors for the fees of the Vendors'
professional advisers in cleared funds to the Vendors Solicitors (whose
receipt shall be an absolute discharge therefor and the Purchaser shall
not be concerned to see to the distribution of the moneys represented
thereby) by no later than the Long Stop Date.
21
<PAGE>
6. COMPLETION ACCOUNTS
6.1 The Vendors and the Purchaser shall use all reasonable endeavours to
procure that the Company shall prepare Completion Accounts for the
Group in respect of the period from the Accounting Date to the
Completion Accounts Date and a draft Working Capital Statement in
accordance with the provisions of Schedule 5 as soon as reasonably
practicable after Completion and in any event within sixty (60) days of
the Completion Date and that the Company shall deliver the same to the
Purchaser and the Purchaser's Accountants.
6.2 The Purchaser shall procure that the Purchaser's Accountants shall,
within forty five (45) days of the Purchaser's Accountants receiving
the draft Completion Accounts and draft Working Capital Statement
review the same and applying the same basis and principals referred to
in clause 6.1 deliver to the Purchaser and the Vendors a written notice
stating either:
6.2.1 that in their opinion the draft Completion Accounts and the
draft Working Capital Statement have been prepared in
accordance with the provisions of clause 6.1; or
6.2.2 that they disagree with the draft Completion Accounts and the
draft Working Capital Statement, together with a statement
detailing their reasons for disagreement and showing their
proposed adjustments to the draft Working Capital Statement.
6.3 The Vendors shall have thirty (30) days from receipt of the notice
referred to in clause 6.2.2 to serve a written notice on the Purchaser
stating that they:
6.3.1 agree with the proposed adjustments to the draft Completion
Accounts and the draft Working Capital Statement; or
6.3.2 disagree with the proposed adjustments to the draft Completion
Accounts and the draft Working Capital Statement.
6.4 If the Purchaser's Accountants or the Vendors serve a notice pursuant
to clause 6.2.1 or 6.3.1 (as the case may be) the draft Completion
Accounts and the draft Working Capital Statement (as adjusted if
relevant) shall be the Completion Accounts and the Working Capital
Statement respectively for the purposes of this Agreement but such
Completion Accounts and Working Capital Statement shall be without
prejudice to the Purchaser's right to claim under the Warranties,
clause 10 or otherwise in respect of any matter, but subject always to
clause 9.9.8.2. In carrying out their functions under this Agreement,
the Purchaser's Accountants shall not be deemed to be acting as
arbitrators.
6.5 If the Vendors serve a notice pursuant to clause 6.3.2 and/or the
parties are not able to agree the form and content of the Completion
Accounts and Working Capital Statement within seventy five (75) days of
the date on which they were first submitted to the Purchaser and the
Purchaser's Accountants, the matter may be referred by the Vendors or
the Purchaser to an independent firm of chartered accountants selected
by agreement between the Vendors and the Purchaser, or, failing
agreement, nominated
22
<PAGE>
by the President for the time being of the Institute of Chartered
Accounts in England and Wales on the application of any of the Vendors
or the Purchaser and:
6.5.1 such independent firm of chartered accountants shall be
requested to settle any matter in dispute, applying the same
basis and principles as are referred to in clause 6.1 and
(unless both the Vendors and the Purchaser shall otherwise
direct in writing) determine the form and content of the
Completion Accounts and the Working Capital Statement; and
6.5.2 the decision of such firm of chartered accountants as to the
matter in dispute and their determination (if any) as to the
form and content of the Completion Accounts and the Working
Capital Statement shall be final and binding, in the absence
of manifest error, on the parties hereto and such chartered
accountants shall be deemed to act as experts and not as
arbitrators.
6.6 The costs of the Purchaser's Accountants and the costs of the
independent chartered accountant, if any, shall be borne by the Vendors
if the amount of the Working Capital which is ultimately agreed or
determined in favour of the Purchaser differs by an amount of more than
ten per cent (10%) from the original amount stated in the draft Working
Capital Statement produced by the Company, and otherwise by the
Purchaser.
7. ADJUSTMENT OF CONSIDERATION AND DEFERRED CONSIDERATION
7.1 Subject to clause 7.4, within 7 days of the agreement or determination
of the amount of the Working Capital in accordance with clause 6:
7.1.1 if the amount of the Working Capital exceeds minus fifty
million seven hundred and twenty thousand pounds
(-(pounds sterling)50,720,000), which for the avoidance of
doubt means that the amount of the Working Capital is nearer
to nil, the Purchaser will and/or will procure that SFX UK
will pay to the Vendors' Solicitors (whose receipt shall be an
absolute discharge therefor) an amount equal to such excess
and interest thereon as specified in clause 7.2 and the
Purchaser shall not be concerned to see to the distribution of
the monies so paid;
7.1.2 if the amount of the Working Capital is less than minus fifty
million seven hundred and twenty thousand pounds
(-(pounds sterling)50,720,000), which for the avoidance of
doubt means that the amount of the Working Capital is a larger
negative number, the Vendors will pay to the Purchaser and/or,
at the Purchaser's option, SFX UK an amount equal to such
shortfall and interest thereon as specified in clause 7.2.
7.2 The interest payable on the amount of any excess or shortfall pursuant
to clause 7.1 shall accrue from day to day at the same rate as the rate
set out in the Loan Notes, from and including the Completion Accounts
Date to the date of payment.
7.3 Any amounts payable:
23
<PAGE>
7.3.1 by the Purchaser and/or SFX UK under clause 7.1.1 and clause
7.2 shall be satisfied in cash in the same proportions as set
out in column 4 of Schedule 1;
7.3.2 by the Vendors under clause 7.1.2 and clause 7.2 shall be
satisfied in the same proportions as set out in column 4 of
Schedule 1 by the cancellation of Loan Notes in a principal
amount equal to the amount so payable or, to the extent that
the Vendors no longer hold Loan Notes, in cash, provided that,
if any of the Vendors so elect, any amounts payable by any of
such persons under clause 7.2 shall be satisfied by payment in
cash.
7.4 In relation to the Deferred Consideration Properties:
7.4.1 if the proceeds of any sale of any of the Deferred
Consideration Properties are received by a member of the Group
prior to agreement or determination of the amount of the
Working Capital, the proceeds and deductions that would have
been taken into account in determining the Deferred
Consideration in respect of such properties shall be taken
into account in calculating the amount of the Working Capital;
7.4.2 in all other cases, the proceeds and deductions that would
fall to be taken into account in calculating the Deferred
Consideration shall not be taken into account in calculating
the amount of the Working Capital and any such Deferred
Consideration shall be paid by the Purchaser and/or SFX UK in
cash to the Vendors in the same proportions as set out in
column 4 of Schedule 1 within 30 days of receipt of such
proceeds of sale by the relevant member of the Group.
7.5 The Purchaser shall procure that the relevant member of the Group which
owns the Deferred Consideration Properties shall act promptly on the
reasonable instructions of Paul Gregg and David Rogers in relation to
the terms upon which such properties should be sold and shall procure
that Paul Gregg and David Rogers are given reasonable access at all
reasonable times to papers and documents relating to the Deferred
Consideration Properties.
7.6 In calculating the adjustment for the net amount of the operating
profit and loss made by the business carried on at any of the Deferred
Consideration Properties, the Vendors shall notify the Purchaser in
writing what they consider the profit or loss to be. The Purchaser
shall within 14 days of such notification inform the Vendors in writing
whether it agrees or disagrees with the same. If the Purchaser agrees,
then the amount of Deferred Consideration referable to that Deferred
Consideration Property shall be final and paid as provided in clause
7.4. If the Purchaser disagrees with the amount notified to it and it
and the Vendors cannot reach agreement within 14 days of the
Purchaser's notification of disagreement, the matter shall be referred
to an independent firm of chartered accountants and the provisions of
clause 6.5 shall mutatis mutandis apply. On the decision of the firm of
chartered accountants being published, the amount of the Deferred
Consideration shall be finalised and paid as provided in clause 7.4.
The firm of Chartered Accountants will as part of their
24
<PAGE>
decision determine in what proportion their costs should be borne by
either or both of the Vendors and the Purchaser.
8. RESTRICTION OF VENDORS
8.1 Each of the Vendors undertakes with the Purchaser (for itself and as
trustee for SFX UK, the Company and each of the Subsidiaries) that,
except as provided in clause 8.2 or with the consent in writing of the
Purchaser and subject to the provisions of clause 8.4:
8.1.1 for the period of three (3) years after Completion he or she
will not within the United Kingdom and Eire either on his or
her own account or in conjunction with or on behalf of any
person, firm or company carry on or be engaged, concerned or
interested, directly or indirectly, whether as shareholder,
director, employee, partner, agent or otherwise in carrying on
any business which competes with the business carried on by
any member of the Group at Completion (other than as a holder
of not more than five (5) per cent of the issued shares or
debentures of any company carrying on such a business listed
on a recognised stock exchange);
8.1.2 for the period of three (3) years after Completion he or she
will not either on his or her own account or in conjunction
with or on behalf of any other person, firm or company solicit
or entice away or attempt to solicit or entice away from any
member of the Group the custom of any person, firm, company or
organisation who shall at any time within the year preceding
Completion have been a supplier of goods or services,
identified prospective supplier of goods or services,
representative or agent of any member of the Group or in the
habit of dealing with any member of the Group or enter into
any contract for sale and purchase or accept business from any
such person, firm, company or organisation in a business area
in which any members of the Group competes;
8.1.3 for the period of three (3) years after Completion he or she
will not either on his or her own account or in conjunction
with or on behalf of any other person, firm or company employ,
engage, solicit, entice away or attempt to employ, engage,
solicit or entice away from any member of the Group any person
employed in a managerial, supervisory or sales capacity by, or
engaged as a consultant to, or representative or agent of any
member of the Group at Completion or at any time during the
period of six months immediately preceding Completion (whether
or not such person would commit a breach of contract by reason
of leaving such employment or engagement);
8.1.4 he or she will not make use of or disclose or divulge to any
person (other than to officers or employees of the Company or
any of the Subsidiaries whose province it is to know the same)
at any time hereafter, any Confidential Information, or, for a
period of three (3) years after Completion, any other
information (other than any information properly available to
the public or disclosed or divulged pursuant to an order of a
court of competent jurisdiction) relating to any member of the
Group, the identity of its customers and suppliers, its
products, finance, contractual arrangements, business or
methods
25
<PAGE>
of business and shall use all his or her reasonable endeavours
to prevent the publication or disclosure of any such
information by any person, firm or company with which he or
she is connected;
8.1.5 if, in connection with the business or affairs of any member
of the Group, he or she shall have obtained Confidential
Information belonging to any third party under an agreement
purporting to bind any member of the Group which contained
restrictions on disclosure he or she will not without the
previous written consent of the board of directors of the
Purchaser at any time infringe such restrictions;
8.1.6 he or she will not at any time hereafter in relation to any
trade, business or company use a name or trade mark including
the words Apollo, CCL or The Point or any word confusingly
similar thereto in such a way as to be capable of or likely to
be confused with the name or any trade mark of any member of
the Group and shall use his or her best endeavours to procure
that no such name or trade mark shall be used by any person,
firm or company with which he or she is connected.
8.2 The restrictions set out in clause 8.1 will not apply to the Vendors
(either alone or working with any other person) in connection with:
8.2.1 the exploitation of such Doctor Dolittle rights as are
transferred to Houston Securities Limited prior to Completion
in accordance with terms and conditions of the transfer
agreement between Houston Securities Limited and the relevant
members of the Group;
8.2.2 the operation of the Prince of Wales Hotel and the Palladium
Llandudno as they are currently operated by the Group;
8.2.3 the personal use by Houston Securities Limited of the name
"Apollo" for the period of twelve (12) months from the
Completion Date for the purpose of operating the Deferred
Consideration Properties; and
8.2.4 the development of the land at The Point, Dublin, provided
that such development does not consist of any large scale live
entertainment that might compete with the business of The
Point as it has been carried on from time to time in the five
(5) years up to the Completion Date.
8.3 Each Vendor shall procure that all persons directly or indirectly owned
or controlled by him or her shall be bound by and observe the
provisions of this clause 8 as if they were parties covenanting with
the Purchaser in the same terms.
8.4 While the restrictions contained in this clause 8 are considered by the
parties to be reasonable in all the circumstances, it is recognised
that restrictions of the nature in question may fail for technical
reasons and accordingly it is hereby agreed and declared that if any of
such restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the Purchaser but would be valid if part of the wording thereof were
deleted or the periods thereof reduced or the range of activities or
area dealt with thereby reduced in
26
<PAGE>
scope the said restriction shall apply with only such modifications as
may be necessary to make it valid and effective.
8.5 Each of the Vendors acknowledges that its restrictions and obligations
under this clause 8 are reasonable and necessary to protect the
Purchaser and the business that the Purchaser is acquiring pursuant to
this Agreement and monetary damages would not be an adequate remedy for
the Purchaser for any breach by the Vendors of its restrictions and
obligations and the Vendors accordingly agree that the Purchaser shall
be entitled to specific performance of the Vendors' obligations herein
and to injunctive and other equitable relief in addition to any other
remedy to which it may be entitled at law or in equity.
8.6 The restrictions contained in clauses 8.1 and 8.2 shall be without
prejudice to:
8.6.1 performance by and shall not limit the restrictions on any of
the Vendors under the terms of any of their service and/or
employment agreements (as amended from time to time) with any
member of the Group; and
8.6.2 any shareholding any of the Vendors may hold in the Purchaser.
9. WARRANTIES
9.1 As at the date hereof, the Vendors hereby warrant and undertake to and
with the Purchaser (for itself and as trustee for SFX UK) in the terms
of Schedule 6 and part 1 of Schedule 7, as to Paul Richard Gregg and
Anita Kim Gregg jointly and severally, as to David Charles Rogers and
the DCR Trustees jointly and severally, as to David Clifford Gregg and
the DCG Trustees jointly and severally, and as to and Julie Diane
Rogers and Simon Paul Gregg severally.
9.2 The Warranties (other than the Warranties in paragraphs 3.2, 3.11 and
5.12 of Schedule 6 in respect of which no qualification is accepted)
are given subject to matters fairly disclosed in the Disclosure Letter.
"Fairly" for these purposes means disclosed in a manner so as to enable
a reasonable purchaser to make an informed and accurate assessment of
the significance of the disclosure and its impact upon the relevant
Warranty. In this connection, it is accepted that where a disclosure is
specifically referenced to a numbered warranty, but not to others that
does not of itself mean that it is not fairly disclosed against such
other warranties, provided that a fact or matter will not be deemed to
be fairly disclosed if it could only have been discoverable by the
Purchaser deducing it from the face of a series of documents which are
not connected by explicit references to each other. The parties agree
that a fact or matter will only be deemed to be fairly disclosed to the
Purchaser if it is within the actual knowledge of the Purchaser as a
result of reviewing the Disclosure Letter and/or the documents annexed
thereto (the "Disclosure Bundle") or it is readily discoverable from
the face of any document in the Disclosure Bundle. No letter, document
or other communication shall be deemed to constitute a disclosure for
the purposes of this Agreement unless the same is actually contained in
the Disclosure Bundle.
9.3 The Vendors acknowledge that the Purchaser has entered into this
Agreement in reliance upon the Warranties.
27
<PAGE>
9.4 In the event that any of the Warranties is broken or (as the case may
be) proves to be untrue or misleading in whole or in part, the Vendors
shall indemnify the Purchaser for itself and as trustee for each member
of the Purchaser's Group and Group in respect of:
9.4.1 the full amount of any shortfall or diminution in the value of
any assets of the Company or any of the Subsidiaries and an
amount equal to any other loss suffered or incurred by the
Purchaser, SFX UK, the Company or any of the Subsidiaries or
any successor as a result of or in relation to any act, matter
or circumstance constituting a breach or non-fulfilment of any
of the Warranties, excluding, for the avoidance of doubt, any
right the Purchaser may have to apply the multiple used in
assessing the value of the Sale Shares to the loss suffered as
a result of the breach; and
9.4.2 all costs and expenses incurred by the Purchaser, the Company
and each member of the Group as a result of such breach, and
any reasonable and proper costs (including legal costs on a
solicitor and own client basis), expenses or other liabilities
which any of them may incur either before or after the
commencement of any action in connection with (i) any legal
proceedings in which the Purchaser or the relevant member of
the Group or the Purchaser's Group claims that any of the
Warranties has been broken or is untrue or misleading and in
which judgement is given for the Purchaser or the relevant
member of the Group or the Purchaser's Group or (ii) the
enforcement of any settlement of, or judgement in respect of,
such claim, provided that such claim in respect of such breach
is resolved in favour of the Purchaser or the relevant member
of the Group or the Purchaser's Group.
9.5 Any amounts agreed by each Vendor (including all amounts which are not
in dispute and which form a part of a claim that has not yet been
agreed or finally determined) or, with respect to amounts which are not
so agreed, finally determined to be payable in respect of any breach of
the Warranties or under the terms of clause 10 shall be satisfied
within ten (10) days from such agreement or the date of being finally
determined (and time shall be of the essence for the purpose of this
clause 9.5), to the extent that a claim for breach of a Warranty has
been agreed or finally determined within two (2) years of the
Completion Date, by the transfer to the Purchaser of Consideration
Shares with full title guarantee and free and clear of all liens,
charges and encumbrances which shall be deemed to have a value equal to
the price for which the Consideration Shares were issued to Vendors and
the price in US dollars for the Consideration Shares shall be
translated at the Exchange Rate immediately prior to close of business
in London on the business day prior to the date the claim is agreed or
finally determined, and otherwise, at the option of each of the
Vendors, by:
9.5.1 cancellation in whole or in part (as is necessary) of the Loan
Notes provided that such Loan Notes are tendered to the
Purchaser for cancellation, which shall be deemed to have a
value equal to their face value together with any unpaid
interest accrued thereon; and/or
9.5.2 the transfer to the Purchaser of Consideration Shares with
full title guarantee and free and clear of all liens, charges
and encumbrances which shall be
28
<PAGE>
deemed to have a value equal to the average closing price of
such stock over the five business days prior to the date the
claim is agreed or finally determined and the price in US
dollars for the Consideration Shares shall be translated at
the Exchange Rate immediately prior to close of business in
London on the business day prior to the date the claim is
agreed or finally determined; and/or
9.5.3 payment in cash.
For the purposes of this clause 9.5, "finally determined" means a final
decision of a Court or tribunal of competent jurisdiction from which
there is no appeal or in relation to which the right to appeal has not
been made within the applicable time limit. If any of the Vendors fails
to make such payment, the Purchaser shall have the absolute right
without prejudice to any other rights of recovery the Purchaser or any
other member of the Purchaser's Group may have, without further notice
to the Vendors, to satisfy the amount of such payment by cancelling the
appropriate number of Consideration Shares on the books of the
Purchaser with the shares to have a value equal, to the extent that
such cancellation is carried out within two (2) years of the Completion
Date, to the price for which the Consideration Shares were issued to
Vendors and otherwise the average closing price of such stock over the
five business days prior to the date the claim is agreed or finally
determined and the price in US dollars for the Consideration Shares
shall be translated at the Exchange Rate immediately prior to close of
business in London on the business day prior to the date the claim is
agreed or finally determined.
9.6 Each of the Warranties shall be separate and independent and, save as
expressly provided to the contrary, shall not be limited by reference
to or inference from any other Warranty or any other term of this
Agreement.
9.7 Where any statement in the Warranties or any confirmation or
certificate given by any of the Vendors hereunder or pursuant hereto is
qualified by the expression "so far as the Vendors are aware" or "to
the best of the Vendors' knowledge and belief" or any similar
expression, that statement shall be deemed to include an additional
statement that it has been made after reasonable enquiry of each of the
Directors of each member of the Group, Craig Morgan, Heather Salter and
Terry Carnes of the subject matter of the Warranties.
9.8 Each of the Vendors hereby agrees with the Purchaser (for itself and as
trustee for SFX UK, the Company and each of the Subsidiaries) to waive
any rights which he or she may have in respect of any misrepresentation
or inaccuracy in, or omission from, any information or advice supplied
or given by the Company or its Subsidiaries or its or their officers,
employees or advisers in connection with the giving of the Warranties
and the preparation of the Disclosure Letter.
9.9 Subject to clause 9.10, the parties agree as follows:
9.9.1 The liability of the Vendors under the Warranties shall, save
in relation to the Warranties in paragraph 2 of Schedule 6
(the "Tax Warranties"), cease on the earlier of two years from
the Completion Date and thirty (30) days after the audited
accounts for the second audit of the Group following
Completion have
29
<PAGE>
been filed at Companies House, except (subject to clause
9.9.10) in respect of matters which have been the subject of a
written claim made before such date by the Purchaser or SFX UK
or the Purchaser's Solicitors to any of the Vendors or the
Vendors' Solicitors.
9.9.2 The liability of the Vendors under the Tax Warranties shall
cease six (6) years after the first anniversary of the
Accounting Date, except in respect of matters which have been
the subject of a written claim made before such date by the
Purchaser or the Purchaser's Solicitors to any of the Vendors
or the Vendors' Solicitors.
9.9.3 Any claim which is made under clause 9.9.1 or 9.9.2 within the
required period shall (unless settled or withdrawn) be deemed
to have been waived or withdrawn if legal proceedings in
respect thereof are not issued and served on the Vendors
within nine months of written notice of the claim first being
given, except in the case of a claim notified under clause
9.9.10 where legal proceedings must be issued and served
within nine months of the liability becoming an actual rather
than contingent liability, and time shall be of the essence
for the purposes of clauses 9.9.1 and 9.9.2.
9.9.4 The aggregate liability of Paul Richard Gregg and Anita Kim
Gregg under the Warranties and clause 10 of the Agreement
shall be limited to 67.144% of the Consideration less
(pounds sterling)38,272,000.
9.9.5 The liability under the Warranties and clause 10 of this
Agreement of:
9.9.5.1 David Charles Rogers together with the DCR Trustees,
Samuel John Shrouder together with the SJS Trustees,
and David Clifford Gregg together with the DCG
Trustees shall in each case be limited to their
individual proportion of the Consideration aggregated
with the relevant proportion of the Consideration of
the relevant Vendor Trustee less the equivalent
proportion of (pounds sterling)57,000,000 and then
reduced by twenty five percent (25%); and
9.9.5.2 Simon Paul Gregg and Julie Diane Rogers shall in each
case be limited to their individual proportion of the
Consideration less the equivalent proportion of
(pounds sterling)57,000,000 and then reduced by
twenty five percent (25%).
9.9.6 Save in relation to the Warranties in paragraph 5 of Schedule
6 and the Tax Warranties, no liability shall attach to the
Vendors under the Warranties:
9.9.6.1 where the amount of any individual claim is less than
ten thousand pounds ((pounds sterling)10,000), such
claims being ignored for the purposes of calculating
the liability of the Vendors under the Warranties
unless such claims, when aggregated, amount to more
than two hundred thousand pounds ((pounds
sterling)200,000) and further provided that one or
more claims deriving from, or attributable to, the
same matter or circumstance shall be treated as one
claim for the purpose of this clause; and
30
<PAGE>
9.9.6.2 until the aggregate amount of all claims shall exceed
one million five hundred thousand pounds
((pounds sterling)1,500,000) and in such event the
Vendors shall be liable for all amounts over two
hundred thousand pounds ((pounds sterling)200,000).
9.9.7 In relation to the Warranties in paragraph 5 of Schedule 6, no
liability shall attach to the Vendors unless the aggregate
amount of all claims under such Warranties shall exceed five
hundred thousand pounds ((pounds sterling)500,000) and in such
event the Vendors shall be liable for the excess only.
9.9.8 The Vendors shall, save in relation to the Tax Warranties, not
be liable under the Warranties:
9.9.8.1 to the extent that such claim would not have arisen
but for some voluntary act or omission occurring
after Completion outside the ordinary course of
business (otherwise than pursuant to a legally
binding commitment binding on the Company or any
Subsidiary created on or before Completion) by or on
behalf of all or any of the Purchaser, the Company or
any Subsidiary and the Purchaser, the Company or any
Subsidiary (as the case may be) or any of its
directors knew or should reasonably have known that
such act or omission could reasonably be or have been
expected to give rise to or increase such claim and a
reasonable alternative course of action, having
regard, without limitation, to the protection of the
goodwill of the Purchaser and the members of the
Group and the Purchaser's Group, was available to the
Purchaser, the Company or the Subsidiary (as the case
may be) which could be expected not to have given
rise to such claim or to a claim of such amount;
9.9.8.2 to the extent that a specific provision is made in
the Completion Accounts in respect of the matter to
which the liability specifically relates;
9.9.8.3 to the extent any claimant(s) is or are entitled to
claim indemnity against any loss or damage arising
out of the breach or claim under the terms of any
insurance policy from time to time in force;
9.9.8.4 which would not have arisen but for anything
expressly provided to be done or omitted to be done
pursuant to this Agreement; or
9.9.8.5 to the extent that any losses, credits, reliefs or
any other allowable sums arising or becoming
available to the Company or any Subsidiary on or
before Completion and previously unutilised (other
than any such reliefs or rights to repayment as are
mentioned in clauses 10.1.5.1 to 10.1.5.3 inclusive)
are available to the Company or any Subsidiary for
set-off against the Tax that is the subject of such
claim or the liability to which it relates (and so
that the use of any such losses, credits, reliefs or
allowable sums shall not of itself give rise to a
claim).
31
<PAGE>
9.9.9 The Vendors shall not be liable under the Tax Warranties to
the extent that the limitations in Clause 10.3 are applicable.
9.9.10 If, in respect of a claim for breach of any of the Warranties,
the liability of the Purchaser or the Company or any
Subsidiary is contingent then the Vendors shall not be liable
in respect thereof unless and until such time as the
contingent liability ceases to be contingent and becomes
actual, provided that the liability becomes actual within one
(1) year of the end of the periods referred to in clauses
9.9.1 and 9.9.2 respectively and if the liability does not
become actual within such period the liability of the Vendors
shall cease.
9.9.11 Nothing herein or otherwise shall be deemed to relieve the
Purchaser or the Company or any Subsidiary from any common law
duty to mitigate any loss or damage incurred by it or them.
Neither the Purchaser, nor the Company nor any relevant member
of the Group shall be obliged to make a payment under clauses
9.9.14 or 9.9.15 in respect of any sum or benefit which any of
them shall have received, recovered or become entitled to if
any such sum or benefit falls to be taken into account in
computing any amount to be set off, refunded or repaid to the
Vendors pursuant to clause 10.4.4.
9.9.12 The Purchaser shall not be entitled to recover any sum in
respect of any claim or otherwise obtain reimbursement or
restitution more than once in respect of any one breach of the
Warranties or claim under clause 10 or the subject matter
thereof.
9.9.13 In the event that a claim (other than a claim under clause 10)
against the Vendors arises as a result of or in connection
with a liability to or a dispute with any third party:
9.9.13.1 no such liability or dispute shall be admitted,
settled or discharged without the written consent of
the Vendors (such consent not to be unreasonably
withheld or delayed); and
9.9.13.2 the Purchaser shall or shall procure that SFX UK
shall (provided that they are indemnified to their
reasonable satisfaction by the Vendors against any
costs, expenses, liabilities, penalties, and fines
which may be incurred by the Purchaser and the Group
and the Purchaser's Group in taking such action and
provided that the Vendors give the Purchaser and SFX
UK such assistance as they reasonably require) take
such action to avoid, dispute, resist, appeal,
compromise or contest such liability or dispute as
may be reasonably requested by the Vendors
provided that neither the Purchaser nor SFX UK shall be
obliged to take any action whatsoever that the Purchaser or
SFX UK reasonably believes acting in good faith having taken
account of the reasonable representations of the Vendors will
or is reasonably likely to have a material adverse effect on
the business of any member of the Group taken as a whole. In
relation to any claim against the Company arising from an
audit of the box office takings by any major US or UK
producer, the parties agree that contesting, disputing or
resisting such claim in good faith will not be reasonably
likely to have a
32
<PAGE>
material adverse effect on the business of the Group taken as
a whole. Notwithstanding the above, the Purchaser and SFX UK
may, at their option, assign such claim or any part thereof to
the Vendors.
9.9.14 Where the Purchaser or any member of the Group or the
Purchaser's Group is entitled (whether by right of indemnity,
reimbursement or any other means) to recover from some other
person (not being the Purchaser any member of the Group or the
Purchaser's Group or any person connected with any of them but
including, without limitation, any Tax authority) any sum or
benefit in respect of the same matter that was the subject of
a successful claim for breach of any of the Warranties, the
Purchaser or the relevant member of the Group or the
Purchaser's Group so entitled shall (provided that it is
indemnified to its satisfaction by the Vendors against all
costs, expenses, liabilities, penalties and fines which it or
they may incur thereby and provided that the Vendors give the
Purchaser or the relevant member of the Group or the
Purchaser's Group such assistance as it reasonably requires)
take all reasonable steps to enforce such recovery provided
that neither the Purchaser nor any member of the Group or the
Purchaser's Group shall be required to do anything which in
the reasonable opinion of the Purchaser might have a material
adverse effect on the business of the Group taken as a whole
(in which case the Purchaser shall reimburse the Vendors for
the amount which the Vendors and the Purchaser reasonably
expect the Purchaser to recover from such other person, less
all reasonable costs, expenses, and taxes, but in no event
shall such amount be greater than the amount received by
Purchaser from the Vendors with respect to the same matter
that was the subject of such claim for breach of Warranties).
Notwithstanding the above, the Purchaser or the relevant
member of the Group or the Purchaser's Group entitled to such
recovery may, at its option, assign such claim or any part
thereof for recovery to the Vendors.
9.9.15 In the event that payment is made by the Vendors or any of
them in respect of a claim and the Purchaser or the relevant
member of the Group or the Purchaser's Group or any of them
subsequently recovers from the third party a sum or, in the
case of Tax claims, a benefit in respect of the same matter
that was the subject of a claim, the Purchaser and the Company
or the relevant Group member shall reimburse the Vendors after
receipt of such sum or, in the case of Tax claims, benefit the
net amount received (after deducting any costs including legal
costs on a solicitor and own client basis) but not in any
event exceeding the amount originally paid in respect of the
relevant claim. For the purposes of the foregoing:
9.9.15.1 subject to clauses 9.9.15.2 to 9.9.15.4 below, a sum
or benefit shall also be deemed to have been received
if received by way of credit, set-off or other
deduction or received in kind, provided that such sum
or benefit is reasonably capable of being quantified
in cash.
9.9.15.2 a reduction in liability to Tax arising as a direct
result of any payment made in respect of the claim
shall be deemed to be a sum or benefit received
aforesaid;
33
<PAGE>
9.9.15.3 the recipient shall be deemed to receive a refund or
repayment for Tax purposes when and only when it
would have received the same but for a liability to
any Tax not covered by clause 10 and shall be deemed
to receive a credit for Tax purposes when and only
when the same results in an actual reduction of Tax
not covered by clause 10 that the recipient would
otherwise have been liable to pay;
9.9.15.4 any repayment supplement for Tax purposes or interest
(less tax) paid or received or attributable to the
sum or benefit recovered shall also be accounted for
to the Vendors to the extent referable to the period
after the claim was satisfied.
9.9.16 None of the Vendors shall be liable in respect of any
representations or warranties which are made or deemed to have
been made by them or any of them in relation to or connection
with the subject matter hereof (save for fraudulent
misrepresentation) which are not contained and expressly given
or assumed by them in this Agreement or any document in the
approved terms to be entered into pursuant hereto and the
Purchaser hereby confirms that it has not entered into this
Agreement in reliance on any such representation or warranty.
9.9.17 The Purchaser shall and shall procure that SFX UK shall
indemnify the Vendors and each of them against any and all
reasonable and proper costs and expenses (including legal
costs on a solicitor and own client basis) to the extent that
such costs and expenses are incurred in successfully defending
in all respects a claim for breach of any of the Warranties
and where the Purchaser and the members of the Purchaser's
Group have no right of appeal or the Purchaser has not
appealed within the applicable time limits.
9.9.18 The Purchaser irrevocably and unconditionally waives any right
it may have to sue the Vendors in misrepresentation or to
rescind this Agreement, in either case for any non-fraudulent
misrepresentation made by or on behalf of the Vendors, whether
or not contained in this Agreement, or to terminate this
Agreement for any reason except as provided in clause 5. The
Purchaser's remedy in respect of any such misrepresentation
shall be an action under the terms of this Agreement if and to
the extent the misrepresentation constitutes a breach of the
Warranties.
9.9.19 Notwithstanding any other provision of this Agreement, the
maximum liability of each of the Vendor Trustees (and any
trustees to whom they transfer all or any part of the trust
fund of the relevant Trust in exercise of their dispositive
powers under the relevant Trust ("a Transferee Trustee") under
this Agreement shall be limited to the extent that such
liability can be met and discharged out of the net assets
(after costs of realisation of the same and any tax payable on
or by reference to such realisation) held by or on behalf of
such Vendor Trustee in the Trust of which they are trustees at
the time such Vendor Trustee is called upon to make such
payment and no Vendor Trustee (or any Transferee Trustee)
shall incur any personal liability in respect of any claim
under this Agreement.
34
<PAGE>
9.9.20 If a capital distribution is made to a beneficiary of a Trust
before such time as the Vendor Trustee of the relevant Trust
are under no actual or contingent liability under this
Agreement and the beneficiary of the distribution is sui iuris
and shall by deed undertake to accept liability under this
Agreement (subject to the limitations provided herein) whether
to the extent only of the distribution concerned (less any tax
payable by such beneficiary by reason of the receipt thereof)
or generally then the residual liability of such distributing
trustees hereunder shall thereupon be reduced to such extent
or extinguished accordingly.
9.10 Clause 9.9 shall not apply if any claim or claims has or have arisen by
reason of fraud, wilful concealment or dishonesty.
9.11 If any sum payable by the Vendors under this clause 9 shall be subject
to Tax (whether by way of deduction or withholding or direct assessment
of the person entitled thereto) such payment shall be increased by such
an amount as shall ensure that after deduction, withholding or payment
of such Tax the recipient shall have received a net amount equal to the
payment otherwise required hereby to be made.
9.12 The amount paid by the Vendors to the Purchaser or the relevant member
of the Purchaser's Group in satisfaction of any claim shall, so far as
possible, be treated as a reduction by that amount in the Consideration
for the Sale Shares.
10. COVENANT IN RESPECT OF TAX
10.1 In this clause 10 unless the context otherwise requires:
10.1.1 "Claim" means the issue of any notice, letter or other
document by or on behalf of any Tax Authority or the taking of
any action by or on behalf of any Tax Authority from which
letter, notice, document or action it appears that a Tax
liability is to be imposed on any of the Company or a
Subsidiary so that such Company or Subsidiary will or may
become subject to a liability which could give rise to a claim
under the Warranties relating to Taxation or, in the context
of clause 10.2 that a liability or increased liability is to
be imposed on any relevant company.
10.1.2 "event" includes (without limitation) any omission, event,
action or transaction whether or not the Company or any of the
Subsidiaries is a party thereto, the death of any person, a
change in the residence of any person for any Tax purpose, and
the entering into and completion of this Agreement and
references to the result of events on or before the Completion
Date shall include the combined result of two or more events
one or more of which shall have taken place on or before the
Completion Date in circumstances where those events occurring
after Completion occurred inside the Company's ordinary course
of business and is or are:
10.1.2.1 the completion of the disposal by the Company or any
of the Subsidiaries of any asset which was contracted
to be sold by the Company or any of the Subsidiaries
outside the ordinary course of business before
Completion or the performance of any other act which
35
<PAGE>
the Company or any of the Subsidiaries was bound to
perform by virtue of a legally binding obligation it
had entered into outside the ordinary course of
business before Completion;
10.1.2.2 the satisfaction of a condition to which the disposal
by the Company or any of the Subsidiaries of any
asset pursuant to a contract entered into outside the
ordinary course of business before Completion was
subject (in which even the disposal shall, for the
purposes of this clause 10, but subject to clause
10.3.14, be treated as having been made before
Completion and any liability to Tax arising from such
disposal shall be treated as having risen before
Completion);
10.1.2.3 the service of any notice pursuant to section 703 of
the Taxes Act;
10.1.2.4 the bringing into the United Kingdom of any document
executed prior to Completion outside the United
Kingdom where the same is required to be produced in
court in the United Kingdom with a view to protecting
or enforcing any legal rights of the Company or any
of the Subsidiaries;
10.1.2.5 the making of any chargeable payment (as defined in
section 214 of the Taxes Act) where the same is
connected with the exempt distribution (as defined in
section 213(2) of the Taxes Act) made prior to
Completion.
10.1.3 "relief" means any relief, allowance, credit, set off,
deduction or exemption for any Tax purpose;
10.1.4 reference to income or profits or gains earned, accrued or
received shall include income or profits or gains deemed to
have been or treated as or regarded as earned, accrued or
received for the purposes of any legislation;
10.1.5 reference to any Tax liability shall include not only any
liability to make actual payments of or in respect of Tax but
shall also include:
10.1.5.1 the loss or reduction in the amount of, or the
setting off against income, profits or gains, or
against any Tax liability for which no provision has
been made in preparing the Accounts or in preparing
the Completion Accounts, of any relief which would
(were it not for the said loss, reduction or setting
off) have been available to the Company or any of the
Subsidiaries and which has been taken into account in
computing (and so eliminating or reducing) any
provision for deferred Tax which appears (or which
but for such relief would have appeared) in the
Completion Accounts;
10.1.5.2 the loss or reduction in the amount of, or the
setting off against any Tax liability for which no
provision has been made in preparing the Accounts or
in preparing the Completion Accounts, of a right to
repayment of Tax which has been treated as an asset
of the Company or any of the Subsidiaries in
preparing the Completion Accounts; and
36
<PAGE>
10.1.5.3 the utilisation or setting off against income,
profits or gains earned, accrued or received on or
before Completion, or against any Tax liability of
any relief which is not available before Completion
but which arises in respect of an event occurring
after Completion in circumstances where but for such
utilisation or setting off, the Company or any of the
Subsidiaries would have had a Tax liability in
respect of which the Purchaser would have been able
to make a successful claim under this clause 10;
and in such a case as is referred to in Clause 10.1.5.1, the
amount of the Tax liability shall be either the amount of the
relief where the relief which has been lost or set off was a
deduction or offset against Tax or where the relief was a
deduction offset against income profits or gains, the amount
of Tax which, on the basis of rates current at the date of the
loss, would have been saved but for such loss and in the case
of a liability under Clause 10.1.5.1 or 10.1.5.3 where the
relief was subject to a set-off, the Tax liability shall be
the amount of Tax which the Covenantors would have been liable
for hereunder but for the set off;
10.1.6 reference to "the Company" includes a reference to each of the
Subsidiaries;
10.1.7 reference to a payment in respect of Tax means a payment other
than to a Group Company for the surrender of losses or other
amounts by way of group relief (within the meaning of Section
402 of the Taxes Act) or for the surrender of advance
corporation tax or for the transfer of any other relief, a
repayment of any such payment and a payment by way of
indemnity or damages.
10.2 Subject as provided in this Agreement, the Vendors hereby covenant with
and undertake as to Paul Richard Gregg and Anita Kim Gregg jointly and
severally, David Charles Rogers and the DCR Trustees jointly and
severally, Samuel John Shrouder and the SJS Trustees jointly and
severally, David Clifford Gregg and the DCG Trustees jointly and
severally, and Julie Diane Rogers and Simon Paul Gregg severally, to
pay to the Purchaser (for itself and as trustee for SFX UK) a sum equal
to the amount of:
10.2.1 any Tax liability of the Company or any of the Subsidiaries
arising as a result of or calculated by reference to any
income, profits or gains earned accrued or received on or
before the Completion Date or any event on or before the
Completion Date whether or not such Tax is chargeable against
or attributable to any other person;
10.2.2 any Tax liability of any member of the Group that arises after
Completion as a result of an act, omission or transaction by a
person (other than any member of the Group) and which
liability to Tax falls upon the relevant member of the Group
as a result of (i) the failure by such person to discharge
(even after Completion) where due any liability to taxation on
its part and (ii) its having been in the same group for Tax
purposes as that person at any time before Completion;
37
<PAGE>
10.2.3 the standard rate of corporation tax as at the date of this
Agreement multiplied by the aggregate of the payments referred
to in clause 5.5.4 (other than in relation to the payment to
Paul Richard Gregg) and the employer's national insurance
contributions thereon to the extent that a deduction for
corporation tax purposes is denied in whole or in part in
respect thereof; and
10.2.4 all costs and expenses incurred by the Purchaser, the Company
and each member of the Group in connection with a claim by the
Purchaser which results in a payment being made by the Vendors
under this clause 10.2, and any reasonable and proper costs
(including legal costs on a solicitor and own client basis),
expenses or other liabilities which any of them may incur
either before or after the commencement of any action in
connection with (i) any legal proceedings in which the
Purchaser or the relevant member of the Group or the
Purchaser's Group make a claim under this clause 10.2 and in
which judgement is given for the Purchaser or the relevant
member of the Group or the Purchaser's Group or (ii) the
enforcement of any settlement of, or judgement in respect of,
such claim, provided that such claim is resolved in favour of
the Purchaser or the relevant member of the Group or the
Purchaser's Group.
10.3 The covenants contained in clause 10.2 do not apply to any liability:
10.3.1 to the extent that provision or reserve in respect thereof has
been made in the Completion Accounts or to the extent that
payment or discharge of such liability has been taken into
account therein;
10.3.2 in respect of which provision or reserve has been made in the
Completion Accounts which is insufficient only by reason of
any increase in rates of Tax made after the Completion Date
with retrospective effect;
10.3.3 to the extent that the Tax liability arises as a result of the
Purchaser, the Company or any Subsidiary failing to comply
with their respective obligations under this clause 10;
10.3.4 to the extent that the Tax liability in question arises or is
increased as a result of the failure by the Purchaser, the
Company or any Subsidiary after Completion to make any claim,
election, surrender or disclaimer or give any notice or
consent under any enactment relating to Taxation, the making
or giving of which was taken into account in preparing the
Accounts or the Completion Accounts and in the case of a
claim, election, surrender, disclaimer, notice or consent
assumed to be made or given in the preparation of the Accounts
sufficient details of which are notified to the Purchaser at
least 60 days prior to the last date upon which such claim,
election, surrender or disclaimer notice or consent could
validly be made or given;
10.3.5 to the extent that the Tax liability in question arises or is
increased as a result of any voluntary claim, election,
surrender or disclaimer made or notice or consent given after
Completion by the Purchaser, the Company or any Subsidiary
other than pursuant to clause 10.9, 10.9.1 or 10.11 hereof and
other
38
<PAGE>
than pursuant to a comment or suggestion made by the Vendors
or their duly authorised agents in accordance with clause
10.10;
10.3.6 to the extent that the Tax liability in question arises or is
increased as a result of any cessation or winding-up after
Completion of any trade or business carried on by the Company
or any Subsidiary or the Purchaser or any major change after
Completion in the nature or conduct of any trade carried on by
the Company or any Subsidiary;
10.3.7 to the extent that the Tax liability in question arises or is
increased as a result of the any change in law or published
practice or any withdrawal of any extra statutory concession
by any authority competent to impose a Tax liability (a "Tax
Authority");
10.3.8 to the extent that the Tax liability in question arises or is
increased as a result of any change in accountancy principles
or practice or as a result of the change in the bases,
policies, or methods of accounting of the Purchaser, the
Company or any Subsidiary except where such change was
necessary to rectify any prior non-compliance with relevant
generally accepted accounting principles and practice;
10.3.9 to the extent that any relief arising to the Company or
relevant Subsidiary wholly before Completion (other than any
such relief as is referred to in clause 10.1.5.1, 10.1.5.2,
10.1.5.3, 10.4.2, 10.4.3 or 10.5) is available for offset
against the Tax Liability concerned provided that the Vendors
shall have notified the Purchaser in writing of the
availability of such relief and shall have taken all such
steps as are reasonable to assist in obtaining the benefit or
claiming such relief;
10.3.10 to the extent that the Tax liability in question arises or is
increased as a result of any voluntary act, transaction or
omission by the Purchaser, the Company or any Subsidiary after
Completion outside the ordinary course of business and which
could reasonably have been avoided and otherwise (in the case
of the Company and any Subsidiary only) than pursuant to a
legally binding obligation entered into before Completion;
10.3.11 to the extent that the Tax liability has been made good by
insurers deducting for these purposes the associated costs and
expenses of maintaining the relevant policy of insurance;
10.3.12 to the extent that the Purchaser has made recovery in respect
of the Tax liability concerned by means of a claim for breach
of any of the Warranties (whether or not relating to
Taxation);
10.3.13 to the extent that the Tax liability is corporation tax which
has been deducted in calculating the Deferred Consideration;
10.3.14 to the extent that the Tax liability arises solely as a result
of the combination of two or more events one or more of which
shall have taken place on or before the Completion Date in
circumstances where the events occurring after
39
<PAGE>
Completion occurred inside the Company's ordinary course of
business and is or are the events referred to in clauses
10.1.2.1 or 10.1.2.2 AND the income, profits or gains by
reference to which such Tax liability is calculated are actual
income, profits or gains (as opposed to income, profits or
gains which are deemed to have been or treated as or regarded
as earned, accrued or received) which have not been reflected
or taken into account in either the Accounts or the Completion
Accounts;
10.3.15 to the extent that the Tax liability arises by reference to
actual income, profits or gains (as opposed to income, profits
or gains which are deemed to have been or treated as or
regarded as or earned, accrued or received) earned, accrued or
received since the Accounting Date and which are not reflected
or taken into account in the Completion Accounts.
10.3.16 to the extent that the Tax liability arises by reference to
actual income, profits or gains (as opposed to income, profits
or gains which are deemed to have been or treated as or
regarded as earned, accrued or received) earned, accrued or
received in the accounting reference period which ended on the
Accounting Date and which were not reflected or taken into
account in the Accounts.
10.4.1 If any provision for Taxation in the Completion Accounts
proves to be an over-provision, then the amount of such
over-provision shall be dealt with as set out in clause
10.4.4.
10.4.2 If the Vendors and the Purchaser shall agree that any Tax
Claim which has resulted in a payment having been made or
becoming due from the Vendors under this Agreement will give
rise to relief which relief results in an actual saving of Tax
or repayment of Tax for the Company or any Subsidiary which
would not otherwise have arisen, then, the amount by which
that Company's or any Subsidiary's liability to Tax is so
reduced or the amount of such repayment of Tax shall be dealt
with in accordance with clause 10.4.4 below and for these
purposes the Purchaser shall use all reasonable endeavours to
utilise any such reliefs in priority to any other reliefs that
arise in accounting periods commencing after that in which the
relief arose;
10.4.3 If the Vendors and the Purchaser shall agree that the Company
or any Subsidiary has:
10.4.3.1 received after the Completion Date from any Tax
Authority any repayment of Taxation in circumstances
where the Taxation in question was paid before
Completion and the repayment of such Taxation has not
been taken into account or reflected in the Accounts
or the Completion Accounts and is not otherwise dealt
with in accordance with clause 10.4.4; or
10.4.3.2 set off after the Completion Date any relief (other
than such relief as is referred to in clauses
10.1.5.1, 10.1.5.2 or 10.1.5.3) against any Tax
liability (whether arising before or after
Completion) of the Company
40
<PAGE>
or any Subsidiary in circumstances where the Tax
liability in question is not a Tax liability in
respect of which a claim could be made under clause
10 and the relief arises as a result of or is
calculated by reference to an event occurring
(including the accrued earning or receiving of
income, profits or gains) before Completion;
then the Relevant Amount shall be dealt with in accordance
with clause 10.4.4 PROVIDED ALWAYS THAT:
(a) the Relevant Amount shall be in such a case as is
mentioned in clause 10.4.3.1, the amount of the
repayment received by the Company or the Subsidiary
but only to the extent that it is neither (i)
reflected or taken into account in the Accounts or
the Completion Accounts, nor (ii) otherwise taken
into account in accordance with clause 10.4.4;
(b) the Relevant Amount shall be, in such a case as is
mentioned in clause 10.4.3.2, the amount of Taxation
agreed by the Vendors and the Purchaser as having
been saved by the use of the relief in question; and
(c) the Purchaser shall use reasonable endeavours to
recover any such repayment as is mentioned in clause
10.4.3.1 and to procure that the Company and/or the
Subsidiary use any such reliefs as are mentioned in
clause 10.4.3.2 but nothing in this clause 10.4.3.2
(c) shall require the Purchaser to procure that the
Company or Subsidiary utilise any such relief in
priority to any other reliefs which are available to
the Company or the Subsidiary and nothing in this
clause 10.4.3.2 (c) shall require the Purchaser to do
(or to procure that the Company or any of the
Subsidiaries shall do) anything that the Purchaser
reasonably believes is likely to have a material
adverse effect on the business of any member of the
Group taken as a whole.
10.4.4 where it is provided under paragraph 10.4.1, 10.4.2 or 10.4.3
that any amount (the "Relevant Amount") is to be dealt with in
accordance with this paragraph:
(a) the Relevant Amount shall first be set off against
any payment then due from the Vendors under this
Agreement; and
(b) to the extent there is an excess, a refund shall be
made to the Vendors of any previous payment or
payments made by the Vendors under this Agreement and
not previously refunded under this clause up to the
amount of such excess; and
(c) to the extent that the excess referred to in
paragraph (b) of this paragraph is not exhausted
under that paragraph, the remainder of that excess
shall be repaid to the Vendors within 30 days of:
(i) in a case falling within clause 10.4.1, the
date on which the Vendors and the Purchaser
agree that a provision for Tax has proved to
be an over provision;
41
<PAGE>
(ii) in a case falling within clause 10.4.2, the
date on which the Tax which has been reduced
by reason of the relief in question would
otherwise have been due to be paid or (as
the case may be) the date on which the
Company or the Subsidiary receives the
repayment of Tax in question;
(iii) in a case falling within clause 10.4.3.1,
the date on which the Company or the
Subsidiary received the repayment of Tax in
question; and
(iv) in a case falling within clause 10.4.3.2,
the date on which the Tax against which the
relief in question has been set off would
otherwise have been due to have been paid.
10.5 The Purchaser shall and shall procure that the Company and each
Subsidiary takes such steps as are reasonably necessary for the Company
and each Subsidiary to use in the manner hereinafter mentioned all
reliefs (other than any reliefs referred to in clauses 10.1.5.1,
10.1.5.2, 10.1.5.3, 10.4.1, 10.4.2 or 10.4.3 above) arising to the
Company by reason of events occurring on or before the date of
Completion as are available to the Company and as are notified to the
Purchaser in writing by the Vendors to reduce or eliminate any
liability of the Company to make an actual payment of Tax in respect of
which the Purchaser would have been able to make a claim against the
Vendors under this Agreement, the said use being to effect the
reduction or elimination of any such liability to make an actual
payment of Tax to the extent permitted by law, provided that neither
the Purchaser, the Company nor any Subsidiary shall be required to do
anything that, in the reasonable opinion of the Purchaser, might have a
material adverse effect on the business of any member of the Group
taken as a whole.
10.6 The Purchaser shall procure that the Company makes (or joins in making)
such claims and elections and signs such documents as may be reasonably
necessary to effect the reduction or elimination referred to in clause
10.5.
10.7 If the Vendors and the Purchaser shall fail to agree as contemplated in
clauses 10.4.2, 10.4.3, 10.4.3.2 (b) and 10.4.4 (c) (i) within 45 days
of written notice having been served by the Vendors on the Purchaser to
agree the matter in question, the matter shall be referred to such
chartered accountant (the "Independent Accountant") as the parties may
agree or in default of agreement within 10 days nominated by the
President for the time being of the Institute of Chartered Accountants
in England and Wales on the application of any of the Vendors or the
Purchaser. The Independent Accountant shall act as an expert and not as
arbitrator and his decision shall, save in the case of manifest error,
be binding on the parties (including the manner in which his costs
shall be borne by the Vendors and the Purchaser).
10.8 If the Purchaser, the Company or any Subsidiary is entitled to recover
from some other person (not being the Purchaser, any member of the
Group or the Purchaser's Group or any person connected with any of them
but including, without limitation, any Tax Authority) any sum (other
than a sum which is dealt with in accordance with clause 10.4.4) in
respect of a Tax Claim that has resulted or will result in the Vendors
becoming liable to make a payment under this clause 10 or the
Warranties relating to
42
<PAGE>
Taxation, or subsequently becomes entitled to make such a recovery,
then Purchaser shall or shall procure that the Company shall as soon as
reasonably practicable after becoming aware of such entitlement notify
the Vendors of its entitlement and shall, if reasonably so required by
the Vendors in writing and subject to being indemnified against all
losses, costs, interest, damages and expenses which may hereby be
incurred take all such reasonable steps to enforce that recovery
(keeping the Vendors informed of the progress of any action taken) as
the Vendors may reasonably request and, provided that neither the
Purchaser nor the Company nor any Subsidiary shall be required to do
anything which in the reasonable opinion of the Purchaser might have a
material adverse effect on the business of any member of the Group
taken as a whole and shall account to the Vendors for whichever is the
lesser of:
10.8.1 any sum so recovered (including any interest or repayment
supplement paid by the Tax Authority) but net of any Tax paid
by the Company or relevant recipient or which would be due
from the Company or relevant recipient but for any such relief
as is mentioned in clauses 10.1.5.1, 10.1.5.2 or 10.1.5.3
hereof and net of any reasonable costs, expenses and charges
properly incurred in recovering the same; and
10.8.2 the amount paid by or due by the Vendors under this clause 10
or the Warranties relating to Taxation in respect of the Tax
Claim in question.
10.9 The Vendors or their duly authorised agents shall be responsible for,
and have the conduct of preparing, submitting to and agreeing with the
relevant Tax Authorities all Tax returns, computations and other
related documents of the Company and each Subsidiary relating to all
accounting periods ending on or before Completion ("Relevant Accounting
Periods") and subject as hereafter provided shall be solely entitled to
deal with all matters (including correspondence) relating to such Tax
returns, computations, and other related documents.
10.9.1 The Vendors shall submit all Tax returns, computations and
related documents as are referred to in clause 10.9 to the
Purchaser or its duly authorised agents for comment a
reasonable time before they are due to be sent to the relevant
Tax Authority. The Purchaser or its agents shall comment
within 21 days of such submission and if the Vendors shall not
have received comments within that period, the Purchaser or
its agents shall be deemed to have approved such draft
computations. If the Purchaser or its agents have any comments
or suggestions, the Vendors and its agents shall not
unreasonably refuse to adopt such comments or suggestions
provided that nothing herein shall oblige the Company or any
Subsidiary to submit any computation or other document unless
it is reasonably satisfied that it is accurate and complete in
all material respects. The Vendors and the Purchaser shall
respectively afford (or procure to be afforded) to the other
or their agents such information and assistance as may
reasonably be required to prepare, submit and agree all
relevant Tax returns, computations and other related
documents.
10.9.2 The Purchaser shall, except in the case of manifest error,
procure (i) that the Company and each Subsidiary shall cause
the returns referred to in clause 10.9. to be authorised,
signed and submitted to the appropriate Tax Authority without
amendment or with such amendments as the Vendors shall agree
43
<PAGE>
(such agreement not to be unreasonably withheld or delayed);
and (ii) that the Company and each Subsidiary makes (or joins
in making) such claims and elections as the Vendors shall
reasonably require in relation to accounting periods for which
the Vendors have responsibility pursuant to clause 10.9 above.
10.9.3 For the avoidance of doubt, it is hereby agreed that the
Company shall bear the reasonable costs of the Company of
preparing and submitting the tax computations, returns and
other documents referred to in clause 10.9 and dealing with
matters arising in connection therewith.
10.10 The Purchaser shall be responsible for, and have the conduct of
preparing, submitting to and agreeing with the relevant Taxation
Authorities all Tax computations of the Company for the period
comprising Completion subject to all such tax computations, documents
and correspondence (in so far as they relate also to the period between
the Accounting Date and Completion) being submitted in draft to the
Vendors for comment. The Vendors or their duly authorised agents shall
comment within 14 business days of such submission. If the Purchaser
has not received any comments within 21 business days, the Vendors and
its duly authorised agents shall be deemed to have approved such draft
documents. If the Vendors or their duly authorised agents have any
comments or suggestions, the Purchaser shall not unreasonably refuse to
adopt such comments or suggestions except where the Purchaser
reasonably believes the same would be materially prejudicial to the Tax
affairs of any member of the Group taken as a whole. (Provided always
that nothing in this clause 10.10 shall entitle the Purchaser to refuse
to make such claims under sections 152, 153, 155, 156 and 175 TCGA as
are referred to in paragraph 2.15 of the Disclosure Letter or in
respect of the Deferred Consideration Properties.) The Vendors and the
Purchaser shall each respectively afford (or procure the affordance) to
the other or their duly authorised agents of information and assistance
which may reasonably be required to prepare, submit and agree all such
outstanding Tax computations.
10.11 In the event that a Claim against the Vendors arises pursuant to this
clause 10, no such liability or dispute shall be admitted, settled or
discharged without the written consent of the Vendors (such consent not
to be unreasonably withheld or delayed) and the Purchaser shall
(provided that it is indemnified to its reasonable satisfaction by the
Vendors against any costs, expenses, liabilities, penalties, and fines
which may be incurred by the Purchaser, the Group and the Purchaser's
Group in taking such action and provided that the Vendors give the
Purchaser such assistance as they may reasonably require) take such
action or procure that SFX UK shall take such action to avoid, dispute,
resist, appeal, compromise or contest such liability or dispute as may
be reasonably requested by the Vendors provided that the Purchaser
shall not be obliged to take any action which the Purchaser reasonably
believes acting in good faith having taken account of the reasonable
representations of the Vendors will or is reasonably likely to have a
material adverse effect on the goodwill of the Group taken as a whole.
10.12 The Purchaser (for itself and on behalf of SFX UK) hereby covenants
with the Vendors to pay to the Vendors an amount equal to any of the
following:
44
<PAGE>
10.12.1 any liability or increased liability to Tax of any company
under the control of the Vendors which arises as a result of
or by reference to any reduction or disallowance of Group
Relief that would otherwise have been available to the Vendors
or the relevant subsidiary of such company where and to the
extent that such reduction or disallowance occurs as a result
of or by reference to:
(a) any total or partial withdrawal effected by any
Company after Completion of any surrender of Group
Relief that was submitted by any Company to the
Inland Revenue on or before Completion in respect of
any accounting period on or before Completion; or
(b) any total or partial disclaimer made by any Company
after Completion of any capital allowances available
to any Company in respect of any accounting period
ended on or before Completion
save where any such withdrawal or disclaimer is made at the
express written request of the Vendors or pursuant to clause
10.9, 10.9.1, 10.9.2, 10.10 or 10.11 hereof;
10.12.2 any liability or increased liability to the Tax of the Vendors
or any company under the control of the Vendors which arises
as a consequence of any Relevant Company failing to pay the
whole of the Tax charged by any Tax assessment made in respect
of that Relevant Company within six months of the date of that
Tax Assessment where (and to the extent that) the liability
for that Tax arises in circumstances such that the Purchaser
would not have been entitled to make a claim against the
Vendors under clause 10.2 hereof in respect of that Tax had it
been paid by the Relevant Company and, for the purposes of
this sub-clause, the term "Relevant Company" shall mean any of
the Company, any Subsidiary and any other company which is, or
has at any time been, treated for the purposes of any Tax as
being a member of the same group of companies as the
Purchaser;
10.12.3 all costs and expenses incurred by the Vendors in connection
with a claim by the Vendors which results in a payment being
made under this clause 10.12, and any reasonable and proper
costs (including legal costs on a solicitor and own client
basis), expenses or other liabilities which any of them may
incur either before or after the commencement of any action in
connection with (i) any legal proceedings in which the Vendors
make a claim under this clause 10.12 and in which judgement is
given for the Vendors or (ii) the enforcement of any
settlement or, or judgement in respect of, such claim,
provided that such claim is resolved in favour of the Vendors;
10.12.4 where the Purchaser or SFX UK becomes liable to make any
payment under sub-clause 10.12 hereof, the due date for the
making of that payment shall be the date that is the last date
on which the Vendors or, as the case may be, the relevant
company would have had to have paid to the appropriate Tax
Authority the Tax that has given rise to the Purchaser's or
SFX UK's liability under clause 10.12 hereof in order to avoid
incurring a liability to interest or a charge or penalty in
respect of that amount of Tax;
45
<PAGE>
10.12.5 if any payment required to be made by the Purchaser or SFX UK
under clause 10.12 hereof is not made by the due date for the
making thereof, then that payment shall carry interest from
that due date until the date when the payment is actually made
at the rate of three per cent above the base rate for the time
being of National Westminster Bank plc; and
10.12.6 all sums payable by the Purchaser or SFX UK to the Vendors
under this clause shall be paid free and clear of all
deductions or withholdings whatsoever, save only as may be
required by law. If any sum payable by the Purchaser under
this clause 10.12 (other than interest under clause 10.12.5)
shall be subject to Tax (whether by way of deduction or
withholding or direct assessment of the person entitled
thereto) such payment shall be increased by such amount as
shall ensure that after deduction, withholding or payment of
such Tax the recipient shall have received a net amount equal
to the payment otherwise required hereby to be made.
10.13 The liability of:
10.13.1 the Vendors under this clause shall cease after the sixth
anniversary of the first anniversary of the Accounting Date
except in respect of matters which have been the subject of a
written claim before such date by the Purchaser or the
Purchaser's Solicitors to any of the Vendors or the Vendors'
Solicitors provided that any such claim shall be deemed to
have been irrevocably withdrawn if proceedings in respect of
it are not begun within 9 months of the sixth anniversary
referred to above unless the claim in question has arisen by
reason of fraud, wilful concealment or dishonesty in which
event there shall be no contractual limit in the time period
within which such claim may be brought; and
10.13.2 the Purchaser under this clause shall cease after the sixth
anniversary of the first anniversary of the Accounting Date
except in respect of matters which have been the subject of a
written claim before such date by the Vendor or the Vendors'
Solicitors to the Purchaser or the Purchaser's Solicitors
provided that any such claim shall be deemed to have been
irrevocably withdrawn if proceedings in respect of it are not
begun within 9 months of the sixth anniversary referred to
above unless the claim in question has arisen by reason of
fraud, wilful concealment or dishonesty in which event there
shall be no contractual limit in the time period within which
such claim may be brought.
10.14 The due date for the making of payments under this clause 10 (other
than clause 10.12 or clause 10.4.4) shall be the later of the day
following seven days after written demand has been made therefor and:
10.14.1 where the payment relates to a liability of the Company or any
of the Subsidiaries to make an actual payment of or in respect
of Tax, the date which is seven days before the date on which
such actual payment becomes due and payable to the relevant
authority;
10.14.2 where the payment relates to a matter falling within clause
10.1.5.1 or 10.1.5.3, the date falling seven days after the
Vendors have been notified by
46
<PAGE>
the Purchaser that the auditors for the time being of the
Company or the relevant Subsidiary have certified at the
request of the Purchaser or the Company or the relevant
Subsidiary that the Vendors have a liability for a
determinable amount under clause 10.2 or, if later, the date
on which any Tax for which would have been liable under this
clause 10 would have been due and payable to the Tax Authority
entitled to the same but for the use of any such relief as is
referred to in clause 10.1.5.1 or 10.1.5.3
10.14.3 where the payment relates to a matter falling within clause
10.1.5.2 the date on which the repayment of Tax would
otherwise have been due to be made, and;
10.14.4 in the case of costs expenses within clause 10.2.5 seven days
after written demand has been made therefore or, if later, the
date on which such costs become due and payable.
10.15 If any payment due to be made by the Vendors under this clause is not
made on the due date for payment thereof the same shall carry interest
which shall accrue from day to day from such due date of payment until
actual payment at the rate of three per cent above the base rate from
time to time of National Westminster Bank Plc, compounded annually.
10.16 If any sum payable by the Vendors under this clause 10 (other than
interest under clause 10.15) shall be subject to Tax (whether by way of
deduction or withholding or direct assessment of the person entitled
thereto) such payment shall be increased by such an amount as shall
ensure that after deduction, withholding or payment of such Tax the
recipient shall have received a net amount equal to the payment
otherwise required hereby to be made.
10.17 The Purchaser shall and shall procure that SFX UK shall indemnify the
Vendors and each of them against any and all reasonable and proper
costs and expenses (including legal costs on a solicitor and own client
basis) to the extent that such costs and expenses are incurred in
successfully defending in all respects a claim under clause 10.2 hereof
and where the Purchaser and the members of the Purchaser's Group have
no right of appeal or the Purchaser has not appealed within the
applicable time limits.
10.18 The Vendors shall indemnify the members of the Purchaser's Group and
each of them against any and all reasonable and proper costs and
expenses (including legal costs on a solicitor and own client basis) to
the extent that such costs and expenses are incurred in successfully
defending in all respects a claim under clause 10.12 hereof and where
the Vendors have no right to appeal or the Vendors have not appealed
within the applicable time limits.
11. PENSIONS
11.1 For the purposes of this clause 11, the definitions set out in part 1
of Schedule 7 shall apply.
11.2 For the purposes of this clause 11, the value at the Completion Date of
the assets of the Pension Scheme and the value at the Completion Date
of the prospective benefits payable to or in respect of all active
members, pensioners and deferred pensioners
47
<PAGE>
which have accrued in consequence of pensionable service under the
Pension Scheme up to the Completion Date (including any augmentations
to benefits and any benefits due in respect of transfer payments
received by the Pension Scheme) shall be calculated (if the Purchaser
elects to have the value of the Pension Scheme as at the Completion
Date calculated) by the Purchaser's Actuary at the Purchaser's expense,
using the actuarial assumptions used in the last formal Actuarial
Valuation of the Pension Scheme undertaken as at April 1997 and also
the minimum funding requirement.
11.3 In the event that the value of the assets of the Pension Scheme at the
Completion Date is less than the value of the prospective benefits (on
each basis described in clause 11.2) calculated by the Purchaser's
Actuary in accordance with clause 11.2 and certified to the Purchaser
by the Purchaser's Actuary:
11.3.1 the Vendors shall pay to the Purchaser, or if the Purchaser so
requests in writing to the trustees of the Pension Scheme,
such amount as the Purchaser's Actuary shall certify to be
equal to the shortfall and the cost to the Purchaser of the
valuations performed by the Purchaser's Actuary (together with
interest thereon calculated in accordance with this clause)
or, if a shortfall exists on both bases, the greater of the
shortfalls;
11.3.2 the required amount (and the interest on it) shall be paid to
the Purchaser or to the Pension Scheme (as appropriate) no
later than thirty (30) days after the receipt by the Vendor of
the certificate of the Purchaser's Actuary specifying the
value of that amount at the Completion Date;
11.3.3 the Vendors have the option to instruct the Vendors' Actuary
to check the calculations performed by the Purchaser's Actuary
and any dispute between the Purchaser's Actuary and the
Vendors' Actuary regarding the calculations can be referred at
either the Purchaser's or the Vendors' request to an
independent Actuary; and
11.3.4 the Vendors shall, in addition, pay interest upon the
shortfall (or upon such part as shall remain unpaid) from the
Completion Date to the date of actual payment at 2% above the
National Westminster Bank plc base rate from time to time in
force calculated on a day to day basis with monthly rests.
11.4 No liability shall attach to the Vendors under clause 11.3 unless the
aggregate amount of any such liability, when aggregated with any
interest payable in accordance with clause 11.3.4 exceeds fifty
thousand pounds ((pounds sterling)50,000). For the avoidance of doubt,
if such liability does exceed fifty thousand pounds ((pounds
sterling)50,000), the Vendors' liability under Clause 11.3 shall attach
to the entire amount (together with the cost to the Purchaser of the
valuations performed by the Purchaser's Actuary) and not just the
excess.
11.5 In relation to the SSAS:
11.5.1 the Vendors hereby jointly and severally undertake to use
their best endeavours to procure that a deed of amendment for
the SSAS (in the form set out in part 2 of Schedule 7, the
"Deed of Amendment") is executed and that
48
<PAGE>
the approval of the Pension Schemes Office of the Inland
Revenue ("the PSO") is obtained for the Deed of Amendment;
11.5.2 in the event that the approval of the PSO cannot be obtained
for the Deed of Amendment, the Vendors hereby jointly and
severally undertake to use their best endeavours to procure
that the Deed of Amendment is modified in the light of
comments received from the PSO and executed and approval for
such modified Deed of Amendment is subsequently obtained from
the PSO;
11.5.3 the Vendors hereby jointly and severally indemnify and keep
indemnified the Purchaser and the Principal Employer (as
defined in the governing documentation of the SSAS) for the
time being of the SSAS against all costs, claims, demands,
expenses and litigation whenever and howsoever arising in
relation to the SSAS (except and to the extent that such
costs, claims, demands, expenses and litigation arise as a
consequence of default by the said Principal Employer in
relation to its duties and obligations under legislation and
regulations governing the SSAS and its constitutional
documents) and, without prejudice to the generality of the
foregoing, shall indemnify and keep indemnified the Purchaser
and the Principal Employer for the time being of the SSAS
against any liabilities arising by virtue of the failure of
the Vendors to procure the execution of and approval of the
PSO to the Deed of Amendment in the exact form set out in part
2 of Schedule 7 or as modified in accordance with clause
11.5.2.
12. INDEMNITIES
12. The Vendors hereby covenant with and undertake to indemnify the
Purchaser for itself and as trustee for each member of the Purchaser's
Group and the Group and their respective successors in title, officers,
directors, employees and agents as to Paul Richard Gregg and Anita Kim
Gregg jointly and severally, as to David Charles Rogers and the DCR
Trustees jointly and severally, as to Samuel John Shrouder and the SJS
Trustees jointly and severally, as to David Clifford Gregg and the DCG
Trustees jointly and severally, and as to Julie Diane Rogers and Simon
Paul Gregg severally, fully on demand and to keep them indemnified
against any and all liabilities, losses (including consequential
losses) penalties, fines, damages, claims, costs, expenses and legal or
professional fees and disbursements (on a full indemnity basis)
incurred, suffered or sustained by them or asserted against them, or
any or all of them arising out of:
12.1.1 the sale of any of the Deferred Consideration Properties,
including, for the avoidance of doubt, in relation to any
representations and/or warranties given to any of the
purchasers of the such Deferred Consideration Properties; and
12.1.2 the exercise of the option pursuant to the option agreement
dated 7 August 1991 between Dominion James Nederlander and
Apollo Dominion Investments Limited to the extent that the
amount received by the Group is less than eight million five
hundred and seventy seven thousand pounds ((pounds
sterling)8,577,000) as reduced by the net amount (if any) of
the operating profit attributable to the Dominion Theatre and
Nederlander Dominion from the Completion Date until the date
of purchase of the Group's interest.
49
<PAGE>
12.2 The liability of the Vendors shall cease in respect of any claim:
12.2.1 under clause 12.1.1 on the sixth anniversary of completion of
the sale of each such Deferred Consideration Property; and
12.2.2 under clause 12.1.2 on the earlier of the fifth anniversary of
the Completion Date and the date upon which Paul Richard
Gregg's employment is terminated (except in relation to
termination through no fault of his employer).
13. RESTRICTION ON ANNOUNCEMENTS AND CONFIDENTIALITY OF INFORMATION
RECEIVED BY THE VENDORS
13.1 Each of the parties to this Agreement undertakes that it will not (save
as required by law, under any securities act, rules or regulations, or
by any securities exchange or any supervisory or regulatory body to
whose rules any party to this Agreement is subject, including in
connection with the Purchaser's proposed equity offering) make any
statement or announcement in connection with this Agreement unless the
other parties shall have given their respective consents to such
announcement (which consents may not be unreasonably withheld or
delayed and may be given either generally or in a specific case or
cases and may be subject to conditions).
13.2 Subject to clause 13.1, the Vendors undertake with the Purchaser and
the members of the Purchaser's Group that they shall treat as strictly
confidential all information received or obtained by them or their
employees, agents or advisers as a result of entering into or
performing this Agreement including information relating to the
provisions of this Agreement, the negotiations leading up to this
Agreement, the subject matter of this Agreement and the business or
affairs of any member of the Purchaser's Group and subject to the
provisions of clause 13.3 that they will not at any time hereafter make
use of or disclose or divulge to any person any such information and
shall use their best endeavours to prevent the publication or
disclosure of any such information.
13.3 The restrictions contained in clause 13.2 shall not apply so as to
prevent the Vendors from making any disclosure required by law or by
any securities exchange or supervisory or regulatory or governmental
body pursuant to rules to which the relevant Vendor is subject or from
making any disclosure to any professional adviser for the purposes of
obtaining advice (provided always that the provisions of this clause 14
shall apply to and the Vendors shall procure that they apply to and are
observed in relation to, the use or disclosure by such professional
adviser of the information provided to him) nor shall the restrictions
apply in respect of any information which comes into the public domain
otherwise than by a breach of this clause 14 by any Vendor.
14. COSTS
14.1 Each party to this Agreement shall pay its own costs of and incidental
to this Agreement and the sale and purchase hereby agreed to be made.
50
<PAGE>
14.2 Save as specifically referred to in this Agreement, the Vendors confirm
that no expense of whatever nature relating to the sale of the Sale
Shares, the Loan Notes and related guarantee has been or is to be borne
by the Company or any of the Subsidiaries.
15. GENERAL
15.1 This Agreement shall be binding upon and enure for the benefit of the
estates, personal representatives or successors of the parties. This
Agreement may not be assigned by any party without the prior written
consent of each other party. Notwithstanding the foregoing, the
obligations and rights of the Purchaser hereunder or any part thereof
may be assigned and delegated without the consent of the Vendors to any
affiliated company of the Purchaser and/or to any transferee of the
Sale Shares, but only where such transfer is effected pursuant to the
exercise of security rights by any lender to or financial source of the
Purchaser's Group and such rights may be assigned but only as security
to any such lender.
15.2 This Agreement (together with any documents referred to herein or
executed contemporaneously by the parties in connection herewith)
constitutes the whole agreement between the parties hereto and
supersedes any previous agreements or arrangements between them
relating to the subject matter hereof; it is expressly declared that no
variations hereof shall be effective unless made in writing signed by
duly authorised representatives of the parties.
15.3 All of the provisions of this Agreement shall remain in full force and
effect notwithstanding Completion (except insofar as they set out
obligations that have been fully performed at Completion).
15.4 If any provision or part of a provision of this Agreement shall be, or
be found by any authority or court of competent jurisdiction to be,
invalid or unenforceable, such invalidity or unenforceability shall not
affect the other provisions or parts of such provisions of this
Agreement, all of which shall remain in full force and effect and such
invalid or unenforceable provision shall be replaced by a provision or
part of a provision as similar in terms to such invalid or
unenforceable provision as possible to effect the intent of the parties
which shall be valid and enforceable.
15.5 If any liability of one or more but not all of the Vendors shall be or
become illegal, invalid or unenforceable in any respect, such
circumstance shall not affect or impair the liabilities of the other
Vendors under this Agreement.
15.6 The Purchaser may release or compromise the liability of any of the
Vendors hereunder or grant to any Vendor time or other indulgence
without affecting the liability of any other Vendor hereunder.
15.7 Save as stated in relation to clauses 9.6, 9.10.1 and 9.10.2 where time
is of the essence, no failure of any party to exercise, and no delay or
forbearance in exercising, any right or remedy in respect of any
provision of this Agreement shall operate as a waiver of such right or
remedy.
51
<PAGE>
15.8 Upon and after Completion the Vendors shall do and execute or procure
to be done and executed all such further acts, deeds, documents and
things as may be reasonably necessary to give effect to the terms of
this Agreement and to place control of the Company and the Subsidiaries
in the hands of the Purchaser and SFX UK and pending the doing of such
acts, deeds, documents and things the Vendors shall as from Completion
hold the legal estate in the Sale Shares in trust for the Purchaser and
SFX UK.
15.9 At the request of the Purchaser, each of the Vendors shall execute as a
deed a power of attorney in favour of the Purchaser or such person as
may be nominated by the Purchaser generally in respect of the Sale
Shares and in particular to enable the Purchaser (or its nominees) to
attend and vote at General Meetings of the Company.
15.10 Unless this Agreement or any arrangement of which it forms a part is a
non-notifiable agreement pursuant to Section 27A of the Restrictive
Trade Practices Act 1976 ("RTPA 1976") or paragraph 5, Schedule 13 of
the Competition Act 1998, to the extent that any provision of this
Agreement or of any such arrangement is a restriction or information
provision for the purposes of the RTPA 1976 by virtue of which this
Agreement or any such arrangement is registrable under the RTPA 1976,
no such restriction or information provision shall take effect or be
enforced until the day after particulars of this Agreement or (as the
case may be) that arrangement have been furnished to the Director
General of Fair Trading in accordance with the RTPA 1976.
15.11 This Agreement may be executed in one or more counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart and each such counterpart
shall constitute an original of this Agreement but all the counterparts
shall together constitute one and the same instrument.
16. NOTICES
16.1 Save as otherwise provided in this Agreement any notice, demand or
other communication to be served under this Agreement shall be in
writing in the English language and shall be served upon any party
hereto only by posting by first class post or pre-paid recorded
delivery (if to an address in the same country) or air mail (if to an
address in a different country) or delivering the same by hand or by
courier, to its address given or referred to in this clause or sending
the same by facsimile transmission to the number given in this clause
for the addressee or at such other address or number as it may from
time to time notify in writing to the other parties hereto.
16.2 A notice, demand or other communication served by first class post or
pre-paid recorded delivery shall be deemed duly served on an address in
the same country 48 hours (disregarding days which are not business
days) after posting, a notice, demand or other communication served by
air mail shall be deemed duly served on an addressee in a different
country five business days after posting and a notice, demand or other
communication sent by facsimile transmission shall be deemed to have
been served at the time of transmission (save that if the transmission
occurs after 6pm the notice, demand or other communication shall be
deemed to have been served at 8.30am on the next business day following
transmission) and in proving service of the
52
<PAGE>
same it will be sufficient to prove, in the case of a letter, that such
letter was left at or delivered to the correct address of the party to
be served as provided in this Agreement or, in the case of properly
stamped or franked first class post or air mail or pre-paid recorded
delivery, addressed to the address of the party to be served given in
this clause and placed in the post and, in the case of facsimile
transmission, that such facsimile was duly transmitted to the number of
the party to be served given in this clause and an electronic
acknowledgement was received.
16.3 All notices, demands or other communications given under this
Agreement, shall be given to the following addresses:
If to the Vendors: To the address set out in Schedule 1 or such
other address as is notified to the Purchaser
from time to time for these purposes.
Copied to: The Vendors' Solicitors, marked for the attention
of Hilary Winter.
If to the Purchaser: SFX ENTERTAINMENT, INC., 650 Madison Avenue, New
York, NY 10022, United States of America,
telephone (001) 212 838 3100, facsimile (001)
212 753 3188 for the attention of the legal
department.
Copied to: Baker & McKenzie, Two Allen Center, Suite 1200,
1200 Smith Street, Houston, Texas 77002-4579,
United States of America, facsimile: (001) 713
427 5099 for the attention of Amar Budarapu (for
the purpose of information only and not for
purpose of Service).
16.4 For the purposes of this clause "business day" means a day (other than
a Saturday or a Sunday) on which banks are generally open for business
in London and New York.
17. AGENT FOR SERVICE
17.1 The Purchaser agrees that any document may be sufficiently and
effectively served on it in connection with any proceedings in England
and Wales by service on the Purchaser's Solicitors, if no replacement
agent has been appointed and notified to the Vendors pursuant to clause
18.3 below, or on the replacement agent if one has been appointed and
notified to the Vendors.
17.2 Any document served pursuant to this clause shall be marked for the
attention of:
17.2.1 Baker & McKenzie Ref: TEDG: For the attention of the
Litigation Partner/Service of Process, 100 New Bridge Street,
London EC4V 6JA; or
17.2.2 such other person as is appointed as agent for service
pursuant to clause 18.3 below at the address notified pursuant
to 18.3 below.
17.3 If the agent referred to in clause 18.1 above (or any replacement agent
appointed pursuant to this clause) at any time ceases for any reason to
act as such, the Purchaser
53
<PAGE>
shall appoint a replacement agent to accept service having an address
for service in England and Wales and shall notify the Vendors of the
name and address of the replacement agent.
17.4 A copy of any document served on any agent pursuant to this clause
shall be served on the Purchaser at its address for the time being for
the service of notices and other communications under clause 17.3 in
accordance with that clause.
18. GOVERNING LAW AND SUBMISSION TO JURISDICTION
This Agreement shall be governed by and construed in accordance with English law
and the parties hereto submit to the non-exclusive jurisdiction of the English
courts for the purpose of enforcing any claim arising hereunder.
54
<PAGE>
SCHEDULE 2
DETAILS OF THE COMPANY
THE COMPANY
-----------
1. Registered number: 2129195
2. Address of registered office: Grehan House, Garsington Road, Cowley,
Oxford OX4 5NQ
3. Date and place of 7 May 1987
incorporation:
England and Wales
4. Authorised share capital: 5,000,000 ordinary shares of (pounds
sterling)1 each
5. Issued share capital: 3,000,200 ordinary shares of (pounds
sterling)1 each
6. Directors: Paul Richard Gregg, Anita Kim Gregg,
David Charles Rogers, Samuel John
Shrouder, David Clifford Gregg and John
Francis Jarvis
7. Secretary: David Charles Rogers
8. Accounting Reference Date: 30 November
9. Auditors: Smith Partnership and Deloitte & Touche
55
<PAGE>
SCHEDULE 3
THE SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C> <C>
1. Name of Subsidiary: Apollo Dominion Investments Limited
2. Registered Number: 01623438
3. Date and place of Incorporation: 19/03/1982, England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley,
Oxford, OX4 5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder,
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) & P R Gregg 1
identity of beneficial owners: Apollo Leisure (UK) & P R Gregg 99
1. Name of Subsidiary: Apollo Leisure (U.K.) Limited
2. Registered Number: 01444368
3. Date and place of Incorporation: 17/08/1979 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley,
Oxford, OX4 5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder,
M. Adamson, S.C. Lavelle, N.D. Brewster
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership,
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure Group Limited 99
identity of beneficial owners: Apollo Leisure Group Limited & P.R. Gregg 1
1. Name of Subsidiary: Apollo Lyceum London Limited
2. Registered Number: 2898096
3. Date and place of Incorporation: 15/02/1994 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D.
Brewster, S.C. Lavelle
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 2 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited
identity of beneficial owners: 2
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1. Name of Subsidiary: Cardiff International Arena Limited
2. Registered Number: 03014566
3. Date and place of Incorporation: 26/01/1995, England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.C. Lavelle
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 2 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited
identity of beneficial owners: 2
1. Name of Subsidiary: Cardiff World Trade Centre Limited
2. Registered Number: 02965830
3. Date and place of Incorporation: 07/09/94, England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.C. Lavelle
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 2 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 2
identity of beneficial owners:
1. Name of Subsidiary: Apollo Theatre Productions Limited
2. Registered Number: 1544438
3. Date and place of Incorporation: 10/02/1981 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership,
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: Apollo Leisure (UK) & P R Gregg 1
1. Name of Subsidiary: Apollo Theatre (Victoria) Limited
2. Registered Number: 01481278
3. Date and place of Incorporation: 25/02/1980 England & Wales
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: Apollo Leisure (UK) & P R Gregg 1
1. Name of Subsidiary: Dragon Advertising Limited
2. Registered Number: 02655969
3. Date and place of Incorporation: 21/10/91 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100,000 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure Group Limited 75
identity of beneficial owners: Exors G L Watts 15
S M B Watts 10
1. Name of Subsidiary: Manchester Theatres Limited
2 Registered Number: 01889935
3. Date and place of Incorporation: 26/02/85 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder and N D
Brewster
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: D C Rogers (Nominee for Apollo Leisure (UK)
Limited) 1
1. Name of Subsidiary: Tatton Cinemas (Gatley) Limited
2. Registered Number: 0324687
3. Date and place of Incorporation: 25/02/1937, England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
5. Directors: D.C. Rogers, S.J. Shrouder
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 18,000 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 18,000 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Manchester Theatres Limited 17,999 Manchester
identity of beneficial owners: Theatres Limited & D C Rogers 1
1. Name of Subsidiary: World Trade Centre Wales Limited
2. Registered Number: 01340618
3. Date and place of Incorporation: 25/11/1977, England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: Apollo Leisure (UK) & P R Gregg 1
1. Name of Subsidiary: Tickets London Limited
2. Registered Number: 2846049
3. Date and place of Incorporation: 19/08/1993 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D.
Brewster
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 150 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 100
identity of beneficial owners: Tickets International Limited 50
1. Name of Subsidiary: Tickets North Limited
2. Registered Number: 2628279
3. Date and place of Incorporation: 10/07/1991 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D.Brewster
6. Secretary: D.C. Rogers
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000,000 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 2 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) & D C Rogers 1
identity of beneficial owners: Apollo Leisure (UK) Limited 2
1. Name of Subsidiary: Fitzers Limited
2. Registered Number: 02461451
3. Date and place of Incorporation: 19/01/1990. England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, P.J.
Fitzpatrick, F.G. Fitzpatrick, D. Barker
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 50 A ordinary shares and 50 B ordinary shares each
of(pounds sterling)1
10. Issued Share Capital: 50 A ordinary shares and 50 B ordinary shares each
of(pounds sterling)1
11. Registered Shareholders and Apollo Leisure (UK) Limited 50
identity of beneficial owners: P J Fitzpatrick 50
1. Name of Subsidiary: Hutchinson Leisure Group of Companies Limited
2. Registered Number: 00565365
3. Date and place of Incorporation: 28/04/1956, England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D. Brewster
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100,000 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 100,000
identity of beneficial owners:
1. Name of Subsidiary: Hutchinson Cinemas (North Wales) Limited
2. Registered Number: 00964627
3. Date and place of Incorporation: 23/10/1969 England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D. Brewster
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 1,000 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Hutchinson Leisure Group of
identity of beneficial owners: Companies Limited 998
D J Hutchinson 1
D J Hutchinson and Hutchinson Leisure Group of
Companies Limited 1
1. Name of Subsidiary: Hutchinson Cinemas (Properties) Limited
2. Registered Number: 738149
3. Date and place of Incorporation: 18/10/1962 England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D. Brewster
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 5,000 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 1,000 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Hutchinson Leisure Group
identity of beneficial owners: of Companies Limited 999
D J Hutchinson and Hutchinson Leisure
Group of Companies Limited 1
1. Name of Subsidiary: Hutchinson Leisure Limited
2. Registered Number: 1076410
3. Date and place of Incorporation: 12/101972 England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D. Brewster
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 50,000 ordinary shares of 10p each
10. Issued Share Capital: 20 ordinary shares of 10p each
11. Registered Shareholders and Hutchinson Leisure Group
identity of beneficial owners: of Companies Limited 19
D J Hutchinson and Hutchinson Leisure
Group of Companies Limited 1
1. Name of Subsidiary: The Wigan Entertainments Company Limited
2. Registered Number: 0111659
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
3. Date and place of Incorporation: 08/09/1910, England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D. Brewster
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 42,000 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 30,285 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Hutchinson Leisure Limited 30,284
identity of beneficial owners: DJ Hutchinson and Hutchinson Leisure
Limited 1
1. Name of Subsidiary: Unit Four Cinemas Limited
2. Registered Number: 0841717
3. Date and place of Incorporation: 19/03/1965 England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder, N.D. Brewster
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 02/12
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Hutchinson Leisure Group of Companies Limited 99
identity of beneficial owners: Hutchinson Leisure Group of Companies Limited and DC
Rogers 1
1. Name of Subsidiary: Unit Four Cinemas (Accrington) Limited
2. Registered Number: 1559426
3. Date and place of Incorporation: 05/05/1981 England and Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside,
Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder,
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 02/12
9. Authorised Share Capital: 1,500 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 1,500 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Hutchinson Leisure Group of
Identity of beneficial owners: Companies Limited 1,500
1. Name of Subsidiary: Unit Four Cinemas (Wigan) Limited
2. Registered Number: 928375
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
3. Date and place of Incorporation: 06/03/1968 England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 02/12
9. Authorised Share Capital: 100 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Unit Four Cinemas Limited 99
identity of beneficial owners Unit Four Cinemas &DC Rogers 1
1. Name of Subsidiary: Unit Four Cinemas (Walkden) Limited
2. Registered Number: 0787110
3. Date and place of Incorporation: 07/10/1964 England & Wales
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester, M3 5FT
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 02/12
9. Authorised Share Capital: 100 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Unit Four Cinemas Limited 99
identity of beneficial owners: Unit Four Cinemas & D C Rogers 1
1. Name of Subsidiary: Barry Clayman Concerts Limited
2. Registered Number: 01996525
3. Date and place of Incorporation: 06/03/1986 England & Wales
4. Address of Registered Office: 144 Wigmore Street, London, W1H 9FF
5. Directors: Barry Clayman
6. Secretary: Linda Clayman
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100,000 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and Barry Clayman 50
identity of beneficial owners: Apollo Leisure Group Limited 50
1. Name of Subsidiary: Barry Clayman Productions Limited
2. Registered Number: 02405548
3. Date and place of Incorporation: 18/07/1989 England & Wales
4. Address of Registered Office: 144 Wigmore Street, London, W1H 9FF
5. Directors: Barry Clayman, D.C. Rogers, P.R. Gregg
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership
8. Accounting Reference Date: 30/11
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
9. Authorised Share Capital: 100(pounds sterling)1 ordinary shares
249,900 (pounds sterling)1 Deferred Ordinary Shares
10. Issued Share Capital: 16 (pounds sterling)1 ordinary shares
160,000 (pounds sterling)1 Deferred Ordinary Shares
11. Registered Shareholders and Barry Clayman Concerts Limited 15
identity of beneficial owners: David Alan Ballinger 160,000
Barry Clayman 1
1. Name of Subsidiary: Barry Clayman Concerts (London) Limited
2. Registered Number: 02177553
3. Date and place of Incorporation: 13/10/1987 England & Wales
4. Address of Registered Office: 144 Wigmore Street, London, W1H 9FF
5. Directors: Barry Clayman, Linda Clayman
6. Secretary: Linda Clayman
7. Auditors: None
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 1,000 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Barry Clayman Concerts Limited 1,000
identity of beneficial owners:
1. Name of Subsidiary: Street Promotions (Europe) Limited
2. Registered Number: 2721990
3. Date and place of Incorporation: 10/06/1992 England and Wales
4. Address of Registered Office: 144 Wigmore Street, London, W1H 9FF
5. Directors: Barry Clayman
6. Secretary: Linda Clayman
7. Auditors: Smith Partnership
3 Ralli Courts, West Riverside, Manchester M3 5FT
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Barry Clayman Concerts Limited 100
identity of beneficial owners:
1. Name of Subsidiary: Point Exhibition Company Limited
2. Registered Number: 128549
3. Date and place of Incorporation: 29/01/1988
4. Address of Registered Office: The Point Depot, North Wall Quay, Dublin 1
5. Directors: Paul Gregg, Mike Adamson, Brenda Fox, Harry Crosbie
and Simon Crosbie
6. Secretary: Brenda Fox
7. Auditors: KPMG
8. Accounting Reference Date: 28 November
9. Authorised Share Capital: 9,900,000 ordinary shares of(pounds sterling)1 each
100,000 A ordinary shares
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
12,550,000 7% Redeemable Cumulative Preference Shares
500,000 7% Redeemable Cumulative Second Preference
Shares
10. Issued Share Capital: 500,000 ordinary shares of(pounds sterling)1 each
30,000 A ordinary shares of(pounds sterling)1 each
2,800,000 7% Redeemable Cumulative Preference Shares
500,000 7% Redeemable Cumulative Second Preference
Shares
11. Registered Shareholders and Apollo UK Limited, 250,000 ordinary shares of (pounds sterling)1
identity of beneficial owners: Harry Crosbie, 249,999 ordinary shares of (pounds sterling)1 each
Simon Crosbie, 1 ordinary share of (pounds sterling)1 Point
Presentations Limited, 30,000 `A' ordinary shares of
(pounds sterling)1 each Apollo UK Limited, 1,025,000 7%
Redeemable Cumulative Preference Shares of (pounds sterling)1
Harry Crosbie, 1,400,000 7% Redeemable Cumulative
Preference Shares of (pounds sterling)1 Apollo UK Limited, 250,000 7%
Redeemable Cumulative Second Preference Shares (2nd) of
(pounds sterling)1 each
Point Presentations Limited, 250,000 7% Redeemable
Cumulative Second Preference Shares (2nd) of (pounds sterling)1 each
1. Name of Subsidiary: CCL Leisure Limited (was City Centre Leisure
(Holdings) Limited until 06/08/1998)
2. Registered Number: 02227126
3. Date and place of Incorporation: 03/03/1988 England & Wales
4. Address of Registered Office: Carolyn House, Dingwall Road, Croydon, Surrey CR0 9XF
5. Directors: R M Bottomley, N D Brewster, K R Milsom, C A Morgan, D
C Rogers and I E Warren.
6. Secretary: K R Milsom
7. Auditors:
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 56,750 (pounds sterling)1 ordinary shares divided into 28,430 (pounds
sterling)1 A ordinary shares and 28,320 (pound)1 B ordinary shares
10. Issued Share Capital: 28,430(pounds sterling)1 A ordinary shares
28,320(pounds sterling)1 B ordinary shares
11. Registered Shareholders and Apollo Leisure (UK) Limited 28,430 A ordinary shares
identity of beneficial owners: K Milsom 4,885 B ordinary shares
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
L Milsom 1,884 B ordinary shares P Reid 1,416 B ordinary
shares
Wlabrook Trustees (Jersey) Limited 15,710 B
ordinary shares
I Warren 1,416 B ordinary shares
1. Name of Subsidiary: City Centre Leisure (London) Limited
2. Registered Number: 02678878
3. Date and place of Incorporation: 17/01/1992 England & Wales
4. Address of Registered Office: Carolyn House, Dingwall Road, Croydon, Surrey CR0 9XF
5. Directors: R M Bottomley, P J Reid, I E Warren, K R Milsom
6. Secretary:
7. Auditors:
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 5,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 1,000 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and City Centre Leisure Limited 1,000
identity of beneficial owners:
1. Name of Subsidiary: City Centre Leisure (Meridian) Limited
2. Registered Number: 02700627
3. Date and place of Incorporation: 25/03/1992 England & Wales
4. Address of Registered Office: Carolyn House, Dingwall Road, Croydon, Surrey CR0 9XF
5. Directors: R M Bottomley, D G Swinburn
6. Secretary: K R Milsom
7. Auditors:
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 5,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and City Centre Leisure Limited 100
identity of beneficial owners:
1. Name of Subsidiary: City Centre Leisure (Severn) Limited
2. Registered Number: 02678884
3. Date and place of Incorporation: 17/01/1992 England & Wales
4. Address of Registered Office: Carolyn House, Dingwall Road, Croydon, Surrey CR0 9XF
5. Directors: R M Bottomley
6. Secretary: K R Milsom
7. Auditors:
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 5,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and City Centre Leisure Limited 100
identity of beneficial owners:
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1. Name of Subsidiary: City Centre Leisure (Weald) Limited
2. Registered Number: 02678879
3. Date and place of Incorporation: 17/01/1992 England & Wales
4. Address of Registered Office: Carolyn House, Dingwall Road, Croydon, Surrey CR0 9XF
5. Directors: R M Bottomley, P J Reid, K Warren
6. Secretary: K R Milsom
7. Auditors:
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000 ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 1,000 ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and City Centre Leisure Limited 1,000
identity of beneficial owners:
1. Name of Subsidiary: Gold Diggers Limited
2. Registered Number: 2484888
3. Date and place of Incorporation: 26.03.90, England & Wales (as Showclip Limited)
4. Address of Registered Office: 3 Ralli Courts, West Riverside, Manchester.
5. Directors: P.R. Gregg
6. Secretary: Linda Clayman
7. Auditors: Smith Partnership
8. Accounting Reference Date: 31/08
9. Authorised Share Capital: 1000 Ordinary shares of (pounds sterling)1 each
10. Issued Share Capital: 2 Ordinary shares of (pounds sterling)1 each
11. Registered Shareholders and Barry Clayman Concerts Limited 1
identity of beneficial owners: Barry Clayman Concerts Limited and Barry Clayman 1
1. Name of Subsidiary: Point Presentations Limited
2. Registered Number: 14377
3. Date and place of Incorporation: 16/04/1989, Ireland
4. Address of Registered Office: The Point Depot, North Wall Quay, Dublin 1
5. Directors: Paul Gregg, Mike Adamson, Breda Fox, Harry Crosbie
and Simon Crosbie
6. Secretary: Breda Fox
7. Auditors: KPMG
8. Accounting Reference Date: 28 November
9. Authorised Share Capital: 100 ordinary shares of IR(pounds sterling)1 each
10. Issued Share Capital: 2 ordinary shares of IR(pounds sterling)1 each
11. Registered Shareholders and Point Exhibition Company Limited
identity of beneficial owners:
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1. Name of Subsidiary: Point Promotions Limited
2. Registered Number: 172291
3. Date and place of Incorporation: 09/04/1991
4. Address of Registered Office: The Point Depot, North Wall Quay, Dublin 1
5. Directors: Paul Gregg, Mike Adamson, Breda Fox, Harry Crosbie
and Simon Crosbie
6. Secretary: Breda Fox
7. Auditors: KPMG
8. Accounting Reference Date: 28 November
9. Authorised Share Capital: 100 ordinary shares of IR(pounds sterling)1 each
10. Issued Share Capital: 2 ordinary shares of IR(pounds sterling)1 each
11. Registered Shareholders and Point Exhibition Company Limited 1
identity of beneficial owners: Michael Adamson 1
1. Name of Subsidiary: Apollo Cambridge Theatre
2. Registered Number: 1568580
3. Date and place of Incorporation: England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley, Oxford, OX4
5NQ
5. Directors: P R Gregg
6. Secretary: D C Rogers
7. Auditors
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of(pounds sterling)1 each
10. Issued Share Capital: 100 ordinary shares of(pounds sterling)1 each
11. Registered Shareholders and identity of Apollo Leisure (UK) Ltd 99 Apollo Leisure (UK) Ltd
beneficial owners: and P R Gregg 1
</TABLE>
68
<PAGE>
SCHEDULE 4
PART 1
THE PROPERTIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT
-------- DETAILS TERM OF
LEASE
---------------
Free Lease
Hold hold
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 LYCEUM THEATRE, West End Theatre LH 21.11.88 The Theatres Apollo
LONDON 150 years Trust Lyceum
London
Limited
- --------------------------------------------------------------------------------------------------------------------------
2 VICTORIA THEATRE, West End Theatre FH N/a N/a N/a
LONDON
- --------------------------------------------------------------------------------------------------------------------------
3 PLAYHOUSE THEATRE, Provincial Theatre FH N/a N/a N/a
EDINBURGH
- --------------------------------------------------------------------------------------------------------------------------
4 LONDON APOLLO, London Theatre LH 24.3.64 Land Apollo
HAMMERSMITH 125 years Securities Leisure
(Ravenseft) (UK)
Limited
- --------------------------------------------------------------------------------------------------------------------------
5 HOLLYWOOD PARK, Cinema FH N/a N/a N/a
BURNLEY
- --------------------------------------------------------------------------------------------------------------------------
6 CARDIFF INTERNATIONAL Concert and LH 6.7.94 to City and Apollo
ARENA Exhibition 25.12.2131 County of Leisure
Arena and Cardiff (UK)
Offices Limited
- --------------------------------------------------------------------------------------------------------------------------
7 PALACE THEATRE, Provincial Theatre FH N/a N/a N/a
MANCHESTER
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
NO SURETY ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C> <C>
1 None (pound)10 per None Theatre and The Theatres Tenant of restaurant is
annum Restaurant Trust Groupe Chez Gerrard
Restaurants Plc
- ---------------------------------------------------------------------------------------------------------------------------------
2 N/a N/a N/a Theatre Apollo Leisure
(UK) Limited
- ----------------------------------------------------------------------------------------------------------------------------------
3 N/a N/a N/a Theatre Apollo
Leisure (UK)
Limited
- ----------------------------------------------------------------------------------------------------------------------------------
4 None (pound)150,000 25.3.2010 Theatre Ravenseft
per annum Properties
Limited
- ----------------------------------------------------------------------------------------------------------------------------------
5 N/a N/a N/a 9 Screen Apollo Tenant of restaurant is
Multiplex Leisure (UK) Ind Coope (Oxford and
Cinema and Limited West) Limited
Restaurant
- ----------------------------------------------------------------------------------------------------------------------------------
6 None (pound) 15,000 6.7.2001 Arena and City and BT and various other
Agreed Offices County of tenants have short term
increase to Cardiff lets on offices
(pound)300,000
per annum
- ----------------------------------------------------------------------------------------------------------------------------------
7 N/a N/a N/a Theatre Apollo Leisure 999 year lease on stage
(UK) Limited extension from 22.12.80
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
69
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT
-------- DETAILS TERM OF
LEASE
---------------
Free Lease
Hold hold
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8 OPERA HOUSE, Provincial FH N/a N/a N/a
MANCHESTER Theatre
- -----------------------------------------------------------------------------------------------------------------------------
9 BRISTOL HIPPODROME, Provincial FH N/a N/a N/a
BRISTOL Theatre
- -----------------------------------------------------------------------------------------------------------------------------
10 SOUTHPORT THEATRE Provincial LH 12 years from Sefton Apollo
AND FLORAL HALL Theatre and 1.4.96 Metropolitan Leisure
COMPLEX, SOUTHPORT Exhibition Hall Borough (UK)
Council Limited
- -----------------------------------------------------------------------------------------------------------------------------
11 APOLLO BINGO, RHYL Bingo Hall FH N/a N/a N/a
- -----------------------------------------------------------------------------------------------------------------------------
12 APOLLO CINEMA, RHYL Cinema LH 25 years from Denbighshire Apollo
29.9.95 County Council Leisure
(formerly (UK)
Rhuddlan Limited
Borough
Council)
- -----------------------------------------------------------------------------------------------------------------------------
13 APOLLO THEATRE, Provincial FH N/a N/a N/a
MANCHESTER Theatre/Music
Venue
- -----------------------------------------------------------------------------------------------------------------------------
14 APOLLO CINEMA, Cinema FH N/a N/a N/a
LEAMINGTON SPA
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NO SURETY ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
8 N/a N/a N/a Theatre Apollo Leisure
(UK) Limited
- -------------------------------------------------------------------------------------------------------------------
9 N/a N/a N/a Theatre 1. Apollo
Leisure (UK)
Limited
(10 + 10a St
Augustines
Parade)
2. Apollo
Cambridge
Theatre
Limited (main
Theatre)
- -------------------------------------------------------------------------------------------------------------------
10 None Pepper-corn N/a Theatre and Sefton MBC
Exhibition
Hall
- -------------------------------------------------------------------------------------------------------------------
11 N/a N/a N/a Bingo Club Hutchinson 4 lock up shops
Cinemas
(Property)
Limited
- -------------------------------------------------------------------------------------------------------------------
12 N/a (pound)27,500 + None 5 Screen Denbighshire
RPI + profit Rent linked Multiplex County Council
share to RPI
- -------------------------------------------------------------------------------------------------------------------
13 N/a N/a N/a Theatre Apollo Leisure 1 vacant former
(UK) Limited night club
- -------------------------------------------------------------------------------------------------------------------
14 N/a N/a N/a 4 Screen Hutchinson
Cinema Cinemas
(Properties)
Limited
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT
-------- DETAILS TERM OF
LEASE
---------------
Free Lease
Hold hold
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15 APOLLO CINEMA, Cinema FH N/a N/a N/a
BLACKBURN
- -----------------------------------------------------------------------------------------------------------------------------------
16 ALEXANDRA THEATRE, Provincial LH 20 years City of Apollo
BIRMINGHAM Theatre from 21.2.94 Birmingham Leisure
(UK)
Limited
- -----------------------------------------------------------------------------------------------------------------------------------
17 APOLLO CINEMA, Cinema FH N/a N/a N/a
WALLASEY
- -----------------------------------------------------------------------------------------------------------------------------------
18 APOLLO THEATRE, Provincial LH 75 years City of Apollo
OXFORD Theatre from 25.12.32 Oxford Leisure
(UK)
Limited
- -----------------------------------------------------------------------------------------------------------------------------------
19 THE POINT, DUBLIN Concert and FH N/a N/a N/a
Exhibition Arena
- -----------------------------------------------------------------------------------------------------------------------------------
20 DOMINION THEATRE, West End Theatre LH 125 years Land Neder-lande
LONDON less 10 Securities Dominion
days, from (Ravenseft) Limited
25.3.64 (freeholder)
Butlins
Limited
(head
leaseholder)
- -----------------------------------------------------------------------------------------------------------------------------------
21 APOLLO CINEMA, Cinema LH 999 years Lancaster Hutchinson
MORECAMBE from 1.2.96 City Council Leisure
Group of
Companies
Limited
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NO SURETY ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
15 N/a N/a N/a 5 Screen Hutchinson 1 tenanted
Cinema Cinemas restaurant and
(Properties) 1 vacant shop
Limited
- ---------------------------------------------------------------------------------------------------------
16 None Premium of 1.1.2000 Theatre City of
(pound)250,000, Agreed Birmingham
then rent
pepper-corn to increase to
31.12.99 (pound)50,000
pa
- ---------------------------------------------------------------------------------------------------------
17 N/a N/a N/a 6 Screen Hutchinson
Cinema Leisure
Group of
Companies
Limited
- ---------------------------------------------------------------------------------------------------------
18 None (pound)600 No review Theatre, City of
Nightclub Oxford
and Shop
- ---------------------------------------------------------------------------------------------------------
19 N/a N/a N/a Concert and Point 50% Apollo Leisure
Arena Exhibition Group
Co Limited 50% Harry Crosbie
- ---------------------------------------------------------------------------------------------------------
20 (pound)296,153 25.3.2010 Theatre, Apollo
Shops and Dominion
Offices Investments
Limited have
33 1/3rd %
interest in
the Theatre
- ---------------------------------------------------------------------------------------------------------
21 None Pepper-corn None 4 Screen Lancaster
Cinema City Council
- ---------------------------------------------------------------------------------------------------------
</TABLE>
71
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY
-------- DETAILS TERM OF
LEASE
---------------
Free Lease
Hold hold
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
22 GRAND OPERA HOUSE, Provincial FH N/a N/a N/a N/a
YORK Theatre
- -----------------------------------------------------------------------------------------------------------------------------
23 GREHAN HOUSE, Head Office and LH 21 years Apollo Apollo None
OXFORD Finance from 25.9.94 Leisure Leisure
Department Pension (UK)
Scheme Limited
- -----------------------------------------------------------------------------------------------------------------------------
24 EMPIRE THEATRE, Provincial LH 124 years + 340 Liverpool City Apollo N/a
LIVERPOOL Theatre days from Council/Empire Leisure
completion (Merseyside) (UK)
of Agreement Trust Limited Theatre
to Lease
- -----------------------------------------------------------------------------------------------------------------------------
25 OLD FIRE STATION, Studio Theatre LH 9.4.91 to City of Apollo
OXFORD and Cafe Bar 29.9.2009 Oxford Leisure
(UK)
Limited
- -----------------------------------------------------------------------------------------------------------------------------
26 LEAS CLIFF HALL, Provincial LH 16.9.96 to District Apollo None
FOLKESTONE Theatre 31.1.2000 Council of Leisure
Shepway (UK)
Limited
- -----------------------------------------------------------------------------------------------------------------------------
27 PRINCESS THEATRE, Princess Theatre LH 60 years Borough of Apollo None
TORBAY from 17.11.98 Torbay Leisure
(UK)
Limited
- -----------------------------------------------------------------------------------------------------------------------------
28 HOLLYWOOD PARK, Multiplex Cinema LH New Lease Borough of Apollo None
TORBAY (currently under will be from Torbay Leisure
construction) 20 days after (UK)
Practical Limited
Completion,
for 60 years
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------
NO ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- ------------------------------------------------------------------------------------------------
<S>
22 N/a N/a Theatre Apollo Leisure
(UK) Limited
- ------------------------------------------------------------------------------------------------
23 (pound)87,000 25.9.99 Office Apollo Leisure
Agents Pension Scheme
recommend
increase to
(pound)145,000
- ------------------------------------------------------------------------------------------------
24 Pepper-corn N/a Theatre Liverpool
City Council
Limited
- ------------------------------------------------------------------------------------------------
25 Profit N/a Theatre and City of Proposed scheme to
related Cafe Bar Oxford substantially
refurbish building
linked to new Lease
- ------------------------------------------------------------------------------------------------
26 Pepper-corn N/a Theatre District New refurbishment
Council of scheme linked to
Shepway Management Contract
- ------------------------------------------------------------------------------------------------
27 Pepper-corn None Theatre Borough of
Torbay
- ------------------------------------------------------------------------------------------------
28 Pepper-corn From Cinema under Borough of
until 1.12.2010 construction Torbay
30.11.2010 (pound)50,000
pa 5-yearly
reviews RPI
- ------------------------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY
-------- DETAILS TERM OF
LEASE
---------------
Free Lease
Hold hold
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
29 APOLLO CINEMA AND 3 Screen Cinema FH N/a N/a N/a N/a
BINGO, CREWE and Bingo Club
- --------------------------------------------------------------------------------------------------------------------------
30 HOLLYWOOD PARK, 6 Screen Cinema LH 125 years Neath Port Apollo N/a
PORT TALBOT from 30.11.98 Talbot Leisure
County (UK)
Borough Limited
Council
- --------------------------------------------------------------------------------------------------------------------------
31 PALLADIUM CINEMA Bingo Hall and LH Lease ending Mostyn Hutchinson N/a
AND BINGO, Cinema 2913 Estates Cinemas
LLANDUDNO (Properties)
Limited
- --------------------------------------------------------------------------------------------------------------------------
32 PRINCE OF WALES 21 Bedroom Hotel FH N/a N/a N/a N/a
HOTEL, CAERNARFON
- --------------------------------------------------------------------------------------------------------------------------
33 DELIBERATELY LEFT BLANK
- --------------------------------------------------------------------------------------------------------------------------
34 UNIT 4 CINEMA, Vacant Cinema FH N/a N/a N/a N/a
BRIERFIELD
- --------------------------------------------------------------------------------------------------------------------------
35 PORT TALBOT STORE, Warehouse LH 999 years Scotts Apollo N/a
PORT TALBOT from 14.8.89 Leisure
(UK)
Limited
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------
NO ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
29 N/a N/a Cinema and Hutchinson
Bingo Club Cinemas
(Properties)
Limited
- -----------------------------------------------------------------------------------------
30 (pound)15,625 N/a Multiplex Neath Port
for Cinema and Talbot
first 10 Development County
years(pound)1 Site Borough
thereafter Council
- -----------------------------------------------------------------------------------------
31 (pound)35 N/a Bingo Hall Hutchinson 7 tenanted shops
and Cinema Cinemas
(Properties)
Limited
- -----------------------------------------------------------------------------------------
32 N/a N/a Hotel Hutchinson
Cinemas
(Properties)
Limited
- -----------------------------------------------------------------------------------------
33
- -----------------------------------------------------------------------------------------
34 N/a N/a Vacant Cinema Hutchinson
Group of
Companies
Limited
- -----------------------------------------------------------------------------------------
35 Pepper-corn N/a Warehouse Apollo Agreed sale of
Leisure (UK) warehouse and land
Limited for (pound)296,000
- -----------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4
PART 1 - THE PROPERTIES
- -------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY
-------- DETAILS TERM OF
-------------- LEASE
Free Lease
Hold hold
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36 ASTRA CINEMA, 4 Screen Cinema FH N / a N / a N / a N / a
BARROW
- -------------------------------------------------------------------------------------------------------------------------
37 PLAZA BINGO, WIDNES Bingo Club FH N / a N / a N / a N / a
- -------------------------------------------------------------------------------------------------------------------------
38 PALLADIUM BINGO, Bingo Club FH N / a N / a N / a N / a
BLACKPOOL
- -------------------------------------------------------------------------------------------------------------------------
39 TATTON CINEMA, 3 Screen Cinema FH N / a N / a N / a N / a
GATLEY
- -------------------------------------------------------------------------------------------------------------------------
40 HEN & CHICKENS, Public House LH 10 years Ind Coope Apollo N / a
BIRMINGHAM from 14.9.92 (Oxford and Leisure
West) Limited (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------------
41 PALACE BINGO, Bingo Hall LH 21 years Warrington Hutchinson N / a
WARRINGTON from 1.1.78 Borough Cinemas
Council (Properties)
Limited
- -------------------------------------------------------------------------------------------------------------------------
42 UNIT 4 CINEMA, 4 Screen Cinema LH 21 years Liverpool Unit 4 David
WALKDEN from 13.1.86 and Cinemas Tattersall
Lancashire Limited and Joyce
Properties Tattersall
Limited
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------
NO ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
36 N / a N / a Vacant Hutchinson Cinema and 4 shops
former Cinemas currently for sale
Cinema (Properties)
Limited
- ----------------------------------------------------------------------------------
37 N / a N / a Vacant Hutchinson Currently for sale
Bingo Cinemas
Hall (Properties)
Limited
- ----------------------------------------------------------------------------------
38 N / a N / a Bingo Hall Hutchinson
Group of
Companies
Limited
- ----------------------------------------------------------------------------------
39 N / a N / a Cinema Hutchinson
Group of
Companies
Limited
- ----------------------------------------------------------------------------------
40 (pound)80,000 None Public Ind Coope
House (Oxford and
/Nightclub West) Limited
- ----------------------------------------------------------------------------------
41 (pound)12,000 N / a Vacant Warrington Ongoing negotiations
Bingo Borough with Council
Hall Council regarding
alternative uses
- ----------------------------------------------------------------------------------
42 (pound)17,000 15.1.2001 Cinema Liverpool
and
Lancashire
Properties
Limited
- ----------------------------------------------------------------------------------
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4
PART 1 - THE PROPERTIES
- -------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY
-------- DETAILS TERM OF
--------------- LEASE
Free Lease
Hold hold
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
43 PLAZA CINEMA & 2 Screen Cinema FH N / a N / a N / a N / a
BINGO, BANGOR and Vacant
Bingo Club
- -------------------------------------------------------------------------------------------------------------------
44 APOLLO CINEMA, 3 Screen Cinema LH Long Budget Hutchinson N / a
STAFFORD leasehold Howarth Cinemas
into (Properties)
perpetuity Limited
- -------------------------------------------------------------------------------------------------------------------
45 HOLLYWOOD PARK, 6 Screen Cinema LH 25 years Positive Apollo N / a
BARROW from 25.12.98 Location Leisure
Properties (UK)
Limited Limited
- -------------------------------------------------------------------------------------------------------------------
46 EMPIRE BINGO, Bingo Club N / a N / a N / a N / a
CAERNARFON
- -------------------------------------------------------------------------------------------------------------------
47 COPPULL OFFICES, Regional Office LH 3 years Palatine Apollo N / a
COPPULL, CHORLEY from 1.3.99 Developments Leisure
Limited (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------
48 134 WIGMORE Former offices,
STREET, LONDON now vacated at
end of lease
- -------------------------------------------------------------------------------------------------------------------
49 144 WIGMORE Offices for BCC LH 25 years Zaison Apollo N / a
STREET, LONDON /Apollo from 25.12.86 Investments Leisure
Productions Limited (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------
NO ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
43 N / a N / a Cinema / Hutchinson 3 vacant shops
vacant Cinemas
Bingo (Properties)
Club Limited
- ---------------------------------------------------------------------------------------
44 (pound)400 N / a 3 Screen Budget
Cinema Howarth
- ---------------------------------------------------------------------------------------
45 (pound)59,500 25.12.2003 6 Screen Positive
Cinema Location
Properties
Limited
- ---------------------------------------------------------------------------------------
46 N / a N / a Bingo Club Hutchinson
Cinemas
(Properties)
Limited
- ---------------------------------------------------------------------------------------
47 (pound)18,350 N / a Offices Palatine
Developments
Limited
- ---------------------------------------------------------------------------------------
48
- ---------------------------------------------------------------------------------------
49 (pound)41,500 1.1.2006 Offices Superior
Lessee
Zaison
Investments
Limited
- ---------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4
PART 1 - THE PROPERTIES
- -------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY
-------- DETAILS TERM OF
--------------- LEASE
Free Lease
Hold hold
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 TICKETS LONDON, Offices LH New lease Nederlander Apollo -
LONDON being Dominion Leisure
prepared Limited (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------
51 TICKETS DIRECT, Offices LH 7 years Drew Apollo -
MANCHESTER from 25.3.94 Investments Leisure
Limited (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------
52 BOARS HILL HEATH, Offices Licence Ongoing Mrs Gregg Apollo -
OXFORD Leisure
(UK)
Limited
- -------------------------------------------------------------------------------------------------------------------
53 SPA PAVILION, Provincial LH 20 years Suffolk Apollo N / a
FELIXSTOWE Theatre from 3.6.96 Coastal Leisure
District (UK)
Council Limited
- -------------------------------------------------------------------------------------------------------------------
54 BECK THEATRE, HAYES London Theatre Management 15 years London Apollo N / a
Agreement and from 1.4.92 Borough of Leisure
Licence Hillingdon (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------
55 WYVERN THEATRE, Provincial Management 10 years Swindon Apollo N / a
SWINDON Theatre Agreement from 25.3.94 Council Leisure
(UK)
Limited
- -------------------------------------------------------------------------------------------------------------------
56 TAMESIDE Provincial Management 15 years Tameside Apollo N / a
HIPPODROME, Theatre Agreement from 1.10.92 Metropolitan Leisure
TAMESIDE Borough (UK)
Council Limited
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
NO ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 (pound)13,000 Offices Nederlander
Dominion
Limited
- --------------------------------------------------------------------------------------
51 (pound)59,346 None Call Centre Drew
Investments
Limited
- --------------------------------------------------------------------------------------
52 (pound)50,000 Linked to Offices Mrs Gregg
+ RPI RPI
- --------------------------------------------------------------------------------------
53 (pound)18,000 None Theatre Suffolk
Coastal
District
Council
- --------------------------------------------------------------------------------------
54 - - Theatre London
Borough of
Hillingdon
- --------------------------------------------------------------------------------------
55 N / a N / a Theatre Swindon
Council
- --------------------------------------------------------------------------------------
56 N / a N / a Theatre Tameside
Council
- --------------------------------------------------------------------------------------
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4
PART 1 - THE PROPERTIES
- -------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY
-------- DETAILS TERM OF
--------------- LEASE
Free Lease
Hold hold
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
57 FUTURIST, Provincial Management Scarborough N / a N / a
SCARBOROUGH Theatre Agreement Borough
No formal Council
lease in
place
- --------------------------------------------------------------------------------------------------------------------
58 SHEFFIELD ARENA, Concert and Management Sheffield N / a N / a
SHEFFIELD Exhibition arena Agreement City Trust
- --------------------------------------------------------------------------------------------------------------------
59 CLARENCE HOTEL - Vacant Flat FH N / a N / a N / a N / a
FLAT, LLANDUDNO
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------
NO ANNUAL NEXT RENT PRESENT OWNER REMARKS
RENTAL REVIEW USE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
57 N / a N / a Theatre Scarborough
Borough
Council
- ---------------------------------------------------------------------------------------
58 N / a N / a Concert and Sheffield
Arena City Trust
- ---------------------------------------------------------------------------------------
59 N / a N / a Vacant flat Hutchinson Formally Manager's
Cinemas flat for Clarence
(Properties) Hotel (sold
Limited separately)
- ---------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
PART 2
CERTIFICATES OF TITLE
1. Lyceum Theatre, London
2. Victoria Apollo Theatre, London
3. Edinburgh Playhouse
4. Hammersmith Apollo, London
5. Hollywood Park, Burnley
6. Cardiff International Arena
7. Palace Theatre, Manchester
7a. Bridgwater Store, Manchester
8. Opera House, Manchester
9. Bristol Hippodrome
9a. CAST, Bristol
10. Southport Theatre and Floral Hall
11. Apollo Bingo, Rhyl
12. Apollo 5 Cinema, Rhyl
13. Apollo Theatre, Manchester
14. Apollo 4 Cinema, Leamington Spa
15, Apollo 5 Cinema, Blackburn
16. Alexandra Theatre, Birmingham
17. Apollo 6 Cinema, Wallasey
18. Apollo Theatre, Oxford
19. The Point, Dublin
20. The Dominion Theatre, London
21. Apollo 4 Cinema, Morecambe
22. Grand Opera House, York
23. Grehan House, Oxford
24. Empire Theatre, Liverpool
25. Old Fire Station, Oxford
26. Leas Cliff Hall, Folkestone
27. Princess Theatre, Torbay
28. Hollywood Park, Torbay
29. Apollo Cinema, Crewe
29a. Apollo Bingo, Crewe
30. Hollywood Park, Port Talbot
78
<PAGE>
SCHEDULE 5
PART 1
COMPLETION ACCOUNTS
The Completion Accounts shall be prepared in accordance with the policies that
appear, and in the order shown, below:
1. the specific accounting policies set out in (i) to (viii) below;
2. to the extent not covered by 1 above, the accounting policies, principles,
practices, evaluation rules and procedures, methods and bases adopted by
the Group in preparation of the Accounts; and
3. to the extent not covered by 1 or 2 above, in accordance with UK generally
accepted accountancy principles as at the Completion Accounts Date.
(i) OTHER DEBTORS
Stocks of Paintings
Stocks of paintings (for the avoidance of doubt included within other
debtors in the financial statements of the Group) will only include items
that have been purchased from third parties for future use within the
business. No value will be attributed to any item that has previously been
included within fixed assets.
Stocks of paintings (excluding those transferred into work in progress as
at the Completion Accounts Date) will be valued at cost subject to a
maximum total value for these items of (pounds sterling)60,000.
(ii) PREPAYMENTS
Prepayments will only be included where such prepayments will give rise to
a benefit to the Group after the Completion Accounts Date or are expected
to be recovered in full from promoters or other third parties.
(iii) ACCRUED INCOME
Accrued income will only be included where such amounts are supported by
documentary evidence prepared by third parties that specify amounts to be
paid to the Group. Where such documentary evidence is not available for all
periods up to the Completion Accounts Date, accrued income may be based on
reasonable estimates prepared.
(iv) INVESTMENTS
Doctor Dolittle
The investment in the London production of Doctor Dolittle will be written
down to nil value.
79
<PAGE>
A separate provision will be included within the Completion Accounts for
all further costs to be borne in relation to the London production of
Doctor Dolittle with the exception of storage costs incurred after the
closure of this production.
Any costs expended in relation to the UK tour of Doctor Dolittle shall be
included as current assets.
Listed securities
The quoted investments held by the Group at the Completion Accounts Date
will be valued at market value as at the Completion Accounts Date.
(v) CORPORATION TAX
(a) Full provision will be made for corporation tax which is payable for
all accounting periods ending before the Completion Accounts Date and
which has not yet been paid to the Inland Revenue. In addition, full
provision will be made for corporation tax as if the period beginning
with the day following the Accounting Date and ending on the
Completion Accounts Date was a financial year of the Company and its
Subsidiaries for corporation tax purposes. For the avoidance of
doubt, it shall be assumed that the payments to certain of the
Vendors, managers and employees referred to in (vi) below will be
fully deductible for corporation tax purposes.
(b) In preparing the provision for Tax in the Completion Accounts it
shall be assumed that (i) all of the payments referred to in clause
5.5.4 other than the payments to Paul Richard Gregg and John Jarvis
and the employer's national insurance contributions thereon shall be
deductible for corporation tax purposes and (ii) the payments
referred to in clause 5.5.4 to Paul Richard Gregg and to John Jarvis
and the employer's national insurance contributions thereon shall not
be deductible for corporation tax purposes.
(vi) OTHER CREDITORS
Concert Ledger
All income relating to shows that have not taken place prior to the
Completion Accounts Date will be included within deferred income.
Payments to certain of the Vendors, Managers and Employees
Provision will be made in respect of specific payments due to certain of
the Vendors, managers and employees referred to in clause 5.5.4 of this
Agreement only to the extent that these payments have not been paid on
the Completion Date.
80
<PAGE>
(vii) CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR
Provision for payments to be made in relation to acquisition of remaining
shares in CCL
The provision to be included in respect of future payments to acquire the
remaining issued share capital of CCL will be calculated under the terms
of the shareholders' agreement dated 5 February 1997 as modified by the
memorandum of agreement dated 28 May 1999. The forecast trading results
to be used as the basis for the calculation of this provision are to be
those forecasts prepared for the purposes of the Accounts.
(viii) OTHER MATTERS
Foreign Currencies
Foreign currency balances of all member of the Group (including the
assets and liabilities of The Point Exhibition Company Limited will be
translated into sterling at the prevailing Exchange Rate on the
Completion Accounts Date.
Lease Premiums
Lease premiums will be accounted for in accordance with the provisions of
Urgent Issues Task Force Abstract Number 12.
Vendors Private Costs
A provision will be included in relation to all costs which are either
paid to or on the instruction of the Vendors and which are in excess of
the level of such costs which have been agreed by the Purchaser to be
paid in the period following Completion or are costs which are not
wholly, exclusively and necessarily for the purposes of the business of
the Group which are incurred by the Group in the period beginning on the
day following the Completion Accounts Dates and ending on the Completion
Date.
81
<PAGE>
PART 2
WORKING CAPITAL STATEMENT
The Working Capital Statement shall be prepared in accordance with the policies
set out in (i) to (vi) below:
(i) WORK-IN-PROGRESS
The following projects have been designated as work-in-progress:
Torbay Cinema
Folkestone
Screen Advertising in theatres
Liverpool Phase 2
Warrington
Old Fire Station cafe bar
Stage Door bar
Tower Hamlets (CCL)
Trafford (CCL)
Torbay (CCL)
Bangor
An adjustment will be included within the Working Capital Statement to
increase the level of Working Capital by the value of work-in-progress in
accordance with the following terms:
(a) Costs included within the category of work-in-progress represent
amounts invoiced from third parties only, and include stocks of
paintings not already included in Working Capital.
(b) All costs included within work-in-progress relate to work completed
or assets delivered as at the date of the Completion Accounts.
(c) No internal costs or interest costs are to be included within
work-in-progress.
(d) Any grant or other non-repayable funding which has been received in
relation to schemes included within work-in-progress must be offset
against the capitalised costs within the Working Capital Statement.
(e) No value will be attributed to any items that are transferred into
this category from other categories of fixed assets.
(ii) DEFERRED CONSIDERATION PROPERTIES
The following assets have been designated as "Deferred Consideration
Properties":
Llandudno Bingo and Cinema
Port Talbot warehouse and land
Prince of Wales Hotel
82
<PAGE>
Except to the extent that, if such properties are removed from the Group
prior to Completion, the properties will not be designated as Deferred
Consideration Properties and will not be included in the Working Capital.
Subject to clause 7.4 of this Agreement, the Deferred Consideration
relating to the Deferred Consideration Properties shall be included in
the Working Capital Statement.
(iii) ASSETS FOR SALE
The following assets have been designated as assets for sale and will be
ascribed a total value of (pounds sterling)200,000 in the Working Capital
Statement:
Brierfield Cinema
Widnes Bingo
Clarence Hotel Flat
Barrow Cinema
Blackpool Bingo
(iv) INVESTMENTS
Doctor Dolittle
An adjustment of (pounds sterling)800,000 will be included in the Working
Capital Statement to increase the level of Working Capital in respect of
the London Production of Doctor Dolittle.
Fixed asset investments
No amount shall be included within the Working Capital Statement in
relation to fixed asset investments including the investment in
Nederlander Dominion. However, one third of all working capital balances
(calculated using the same principles as those applied in calculating the
Working Capital) of Nederlander Dominion and the tenancy in common will
be included in the Working Capital Statement.
(v) CASH
An adjustment of nine million pounds ((pounds sterling)9,000,000) will be
included within the Working Capital Statement to reduce the level of
Working Capital in relation to the cash paid by the Purchaser to
subscribe for ordinary shares in the Company in accordance with clause
5.6.1 of this Agreement.
(vi) MINORITY INTERESTS
An adjustment will be included within the Working Capital Statement to
remove the value of all minority interests included within the Working
Capital. For the avoidance of doubt, this paragraph does not refer to
either Nederlander Dominion Limited or the CCL Group.
83
<PAGE>
SCHEDULE 7
PART 1
PENSION WARRANTIES
1. DEFINITIONS
In this Schedule references to paragraphs are references to paragraphs in this
Schedule and the following expressions shall have the following meanings:
1.1 "Actuary" means a Fellow of the Institute of Actuaries or a Fellow of
the Faculty of Actuaries in Scotland;
1.2 "the Final Salary Scheme" means each of Apollo LG Pension and Assurance
Scheme and the Hutchinson Leisure Group Pension Scheme;
1.3 "the GPPs" means each of the Apollo Leisure Group Personal Pension
Plan, the Sheffield Arena Group Personal Pension Plan, the CCL Scottish
Equitable GPP, the CCL Allied Dunbar GPP and any other personal pension
plan to which any of the Group contributes in respect of a present or
former employee of the Group;
1.4 "the Apollo Leisure Group Personal Pension Plan" means the group
personal pension established by the Company with effect from 1 January
1993;
1.5 "the Apollo Leisure Staff Pension Scheme" means the occupational
defined contribution scheme for senior management governed by the
Definitive Trust Deed and Rules dated 1 December 1992 and established
with effect from 1 July 1989;
1.6 "the Apollo L G Pension and Assurance Scheme" means the occupational
defined benefit scheme for staff and manual employees governed by the
Definitive Trust Deed and Rules dated 31 March 1998 and established
with effect from 1 April 1996;
1.7 "the Hutchinson Leisure Group Pension Scheme" means the Hutchison
Leisure Group Limited Pension and Life Assurance Scheme which was
placed into winding up with effect from 31 December 1993;
1.8 "the Money Purchase Schemes" means each of the Apollo Leisure Staff
Pension Scheme, the CCL Directors Pension Schemes with Allied Dunbar,
United Friendly and Scottish Equitable and the SSAS;
1.9 "the Apollo Life Scheme" means the Apollo Leisure (UK) Limited Group
Life Assurance Scheme established by a Deed of Declaration of Trust and
Rules with effect from 1 October 1990;
1.10 "the Pension Schemes" means each of the Apollo LG Pension and Assurance
Scheme, the Hutchison Leisure Group Pension Scheme, the Money Purchase
Schemes, the GPPs and the Apollo Life Scheme and where appropriate,
shall include the trustees of the Pension Schemes;
84
<PAGE>
1.11 "the Purchaser's Actuary" means Richard Soldan of Lane Clark & Peacock,
30 Old Burlington Street, London W1X 2NN or any other actuary appointed
by the Purchaser for the purpose of this Schedule;
1.12 "Retirement Benefit Scheme" means a retirement benefits scheme within
the meaning given to that term in Section 611 of the Taxes Act;
1.13 "the Sheffield Arena Group Personal Pension Plan" means the group
personal pension acquired by the Company when it acquired Sheffield
Arena in 1996;
1.14 "the SSAS" means the occupational defined contribution scheme
established with effect from 10 November 1987 by the Definitive Trust
Deed and Rules dated 26 July 1994 and known as the Apollo Leisure
Pension Scheme;
1.15 "the Taxes Act" means the Income and Corporation Taxes Act 1988; and
1.16 "the Vendors' Actuary" means Pamela Mascall of Legal & General
Assurance Society Limited, Legal & General House, Kingswood, Tadworth,
Surrey KT20 6EU or any other actuary appointed by the Vendors for the
purpose of this Schedule.
2. VENDORS' WARRANTIES (GENERAL)
2.1 Other than the Pension Schemes, no member of the Group provides any
pension, share option, share incentive or similar schemes or
arrangements for the employees or former employees of the Group and the
Vendors and the Group have no obligation (whether legally binding or
established by custom) to pay any pension or make any other payment
after retirement or death or otherwise to provide "relevant benefits"
or to make any payment for the purpose of providing "relevant benefits"
within the meaning of Section 612 of the Taxes Act to or in respect of
any employee or former employee of the Group and that the Vendors and
the Group are not party to any scheme or arrangement having as it
purpose or one of its purposes the making of such payments or the
provision of such benefits;
2.2 The Vendors have supplied to the Purchaser complete and accurate copies
of all announcements and relevant booklets relating to the Pension
Schemes. The Vendors have also supplied to the Purchaser complete and
accurate copies of all trust deeds, rules and resolutions relating to
the Apollo LG Pension and Life Assurance Scheme, the Apollo Leisure
Staff Pension Scheme, the SSAS and the Apollo Life Scheme. In relation
to the Apollo L G Pension and Assurance Scheme, the Vendors have
supplied complete copies of the most recent actuarial valuation and the
Scheme accounts together with copies of any certifications made to the
Inland Revenue under the Finance Act 1986 or Schedule 22 to the Taxes
Act. In relation to the Money Purchase Schemes, the Vendors have
supplied complete copies of the last audited scheme accounts for each
scheme. The GPPs are, and have been since their establishment, group
personal pension arrangements.
2.3 So far as the Vendors are aware, the Pension Schemes comply and have at
all times complied materially with any applicable provisions of the
Pensions Act 1995, the Pension Schemes Act 1993 and all other relevant
legislation and with the relevant requirements of the Pension Schemes
Office and the Contributions Agency affecting
85
<PAGE>
schemes approved (or capable of approval) under either Chapter I or
Chapter IV of Part XIV of the Taxes Act and, where appropriate,
contracted-out under the Pension Schemes Act 1993. There is no reason
why such approval should be withdrawn or not obtained. In addition, the
Vendors, any participating employers and the Pension Schemes have duly
complied with their respective obligations under the applicable trust
deeds and rules or other governing documentation of the Pension Schemes
and the aforementioned applicable legislation and other requirements;
2.4 The Vendors have disclosed to the Purchaser complete and accurate
details of all benefits payable or prospectively payable under the
Pension Schemes to or in respect of all active members, pensioners and
deferred pensioners, including any augmentations of benefits, and
details of any additional undertakings with regard to the provision of
such benefits together with complete, accurate and comprehensive
employee data (including the member's age, sex, pensionable service and
pensionable salary);
2.5 All amounts due to the Pension Schemes or to any insurance company in
connection with them have been paid and, where appropriate, have been
eligible for tax relief. All contributions paid to the Pension Schemes
since their establishment have been paid in accordance with any
guarantees, promises or undertakings given by any member of the Group
or the Pension Schemes to the employees and former employees of the
Group;
2.6 Neither the Group nor the Pension Schemes are parties to any litigation
or arbitration proceedings in respect of the Pension Schemes or the
provision of any relevant benefits (as defined in Section 612 of the
Taxes Act), and there are no current submissions or referrals to the
Pensions Ombudsman or to the Occupational Pensions Advisory Service or
notifications to the Occupational Pensions Regulatory Authority in
respect of the Group or the Pension Schemes and no such submissions,
referrals or notifications are expected by the Vendors and that there
are no outstanding payments or penalties payable by the Group or the
Pension Schemes in respect of any litigation or arbitration proceedings
or determination of the Pensions Ombudsman or the Occupational Pensions
Regulatory Authority;
2.7 No Retirement Benefits Scheme other than the Hutchinson Leisure Group
Pension Scheme in which employees or former employees of the Group
participate or have participated has been or is in the process of being
(or is proposed to be) wound up (in whole or in part) or closed to new
entrants (in whole or in part).
3. WARRANTIES FOR THE FINAL SALARY SCHEMES
3.1 The Apollo L G Pension and Assurance Scheme (the "Pension Scheme") has
been funded to the extent recommended by the actuary to the Pension
Scheme and that neither the Group nor the Pension Scheme has undertaken
to make or accept any transfer payment on agreed terms regarding the
calculation of the payment or the benefits to be credited in respect of
the payment;
3.2 No employers other than the Company participate in the Pension Scheme
and all such participating companies were properly admitted to the
Pension Scheme;
86
<PAGE>
3.3 The Pension Scheme does not hold any employer-related investments
(within the meaning of Section 40 of the Pensions Act 1995);
3.4 All reasonable and appropriate steps were taken by the principal
company and the trustees to trigger the termination of the Hutchinson
Leisure Group Personal Scheme. In addition all necessary and
appropriate steps were taken by the principal company and the trustees
to secure all the assets and liabilities of the Hutchinson Leisure
Group Pension Scheme in accordance with applicable legislative, Inland
Revenue and trust law requirements. This Scheme has been fully wound up
and no further actuarial, legislative or Inland Revenue requirements
need to be satisfied in relation to it.
3.5 There are no provisions for continued private medical insurance or
permanent health and life insurance for ex-employees and ex-directors
including pensioners, other than for G S Lipson, S Simpon, D
Tattershall and P Hancock and no promises of such provisions on leaving
service for whatever reason on retirement for current employees,
workers or directors.
3.6 None of the Pension Schemes are in breach of any legal requirement to
provide equal access to benefits and equal levels of benefits to male
and female employees regardless of sex relating to any UK or European
Community legislation or any other applicable legislation.
4. WARRANTIES FOR THE MONEY PURCHASE SCHEMES
4.1 At no time since the establishment of the Money Purchase Schemes, have
members under them been guaranteed or promised a defined benefit
underpin or any other defined benefit by any member of the Group or by
the Money Purchase Schemes.
4.2 The SSAS has always, and does, comply with the Retirement Benefit
Schemes (Restriction on Discretion to Approve) (Small Self-Administered
Schemes) Regulations 1991 as subsequently amended and the Retirement
Benefits Schemes (Restriction on Discretion to Approve) (Small
Self-Administered Schemes) Regulations 1998. Without prejudice to the
generality of the foregoing, in relation to the property known as
Alexander House, 190/194/196 Garsington Road, Cowley, Oxford, all trust
law, statutory and Inland Revenue requirements have always been and are
satisfied in relation both to that property's purchase and its
subsequent retention by the trustees of the SSAS.
87
<PAGE>
PART 2
FORM OF DEED OF AMENDMENT
THIS DEED OF AMENDMENT is made on 1999
PARTIES
PAUL RICHARD GREGG and ANITA KIM GREGG both of Boars Hill Heath, Jarn Way, Boars
Hill, Oxford, DAVID CHARGES ROGERS and JULIE DIANE ROGERS both of Woodsend
Hamels Lane, Boars Hill, Oxford, SAMUEL JOHN SHROUDER of Sherbourne House,
Lechlade, Gloucestershire, England and HORNBUCKLE MITCHELL TRUSTEES LIMITED
whose registered office is at 4-8 Upper King Street, Leicester LE1 6XA
("Trustees")
RECITALS
(A) By a definitive trust deed dated 10 November 1987 ("the Old Definitive
Deed") made between the Principal Employer and Paul Richard Gregg, David Charles
Rogers and Michael Jeffrey Field, the Principal Employer established a
retirement benefits scheme called the Apollo Leisure Pension Scheme ("the
Scheme") to commence on and operate from 10 November 1987.
(B) This Deed is supplemental (inter alia) to the Old Definitive Deed and the
rules attached thereto ("the Old Rules") and to a supplemental definitive deed
("the Supplemental Deed") made on 26 July 1994 and the rules attached thereto
("the Supplemental Rules") which set out the existing definitive provisions of
the Scheme (together, "the Scheme Documents").
(C) This Deed is subject to a resolution made with effect from 6 April 1997
("the Resolution") that all decisions of the Trustees must be unanimous to be
effective.
(D) The Trustees may under Clause 10 of the Supplemental Deed and the Resolution
modify provisions of the Scheme Documents if acting unanimously.
OPERATIVE PROVISIONS
1. DEFINITIONS
The definitions used in the Supplemental Rules apply equally to this
Deed, except as otherwise stated herein.
2. AMENDMENTS
The following amendments to the Scheme Documents shall apply from the
date hereof:-
2.1 Rule 7 of the Supplemental Rules shall be replaced by the words "Each
of the Employers shall during the continuance of the Scheme contribute
20% of
88
<PAGE>
Remuneration in respect of each Member or such other amount as the
Principal Employer and the Trustees shall agree".
2.2 In Rule 8 of the Supplemental Rules, sub-paragraph (i) shall be
replaced by:-
"(i) no grant or augmentation hereunder shall oblige any Employer
to make contributions to the Fund other than in accordance
with clause 7 above."
2.3 In Clause 19 of the Supplemental Deed the words "the Employers in such
proportion by each Employer as the Trustees shall deem appropriate"
shall be replaced by the words "the Fund". The second sentence of
Clause 19 shall be deleted.
2.4 Clause 15.1 of the Supplemental Deed shall be added to with the words:-
"b) ...., and
c) the Employers consent to the substitution of the Old Company
with the New Company".
2.5 In Clause 15.2 of the Supplemental Deed the words "the Employers" shall
be inserted after the word "Trustees".
2.6 Clause 17.3 of the Supplemental Deed shall be amended by the
replacement of the words "The Principal Employer" in the first sentence
thereof with the words "Scheme" and the addition of the words "out of
the Fund" following the words "Keep indemnified". The last sentence of
the clause shall be deleted and the clause shall be retitled "Indemnity
from the Fund".
2.7 Clause 17.4 shall be deleted.
2.8 In Clause 10 of the Supplemental Deed the words "The Trustees and the
Employers in agreement may by deed or resolution modify all or any of
the provisions of the Scheme where such modification may affect the
Employers liabilities or contributions" shall be inserted at the
beginning of the Clause and the word "other" shall be inserted after
the word "provisions" of the following sentence.
3. CONSENT
The Trustees hereby unanimously consent to the above amendments to be
operative from the date hereof.
NOW this DEED is executed the day and year before written.
89
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this document as a deed on
the date appearing at the head hereof.
EXECUTED by ) _________________________
duly authorised officer on behalf of ) By : Howard J Tytel
SFX ENTERTAINMENT, INC. ) Title: Executive Vice President
Member of the Office of
the Chairman, General
Counsel and Secretary
SIGNED, SEALED )
AND DELIVERED by )
PAUL RICHARD GREGG )
in the presence of )
)
SIGNED, SEALED )
AND DELIVERED by )
ANITA KIM GREGG )
in the presence of )
)
SIGNED, SEALED )
AND DELIVERED by )
DAVID CHARLES ROGERS )
in the presence of )
)
90
<PAGE>
SIGNED, SEALED )
AND DELIVERED by )
JULIE DIANE ROGERS )
in the presence of )
)
SIGNED, SEALED )
AND DELIVERED by )
SAMUEL JOHN SHROUDER )
in the presence of )
)
SIGNED, SEALED )
AND DELIVERED by )
DAVID CLIFFORD GREGG )
in the presence of )
)
SIGNED, SEALED )
AND DELIVERED by )
SIMON PAUL GREGG )
in the presence of )
)
EXECUTED AS A DEED )
by DAVID CHARLES ROGERS )
AS TRUSTEE OF THE DAVID )
CHARLES ROGERS INTEREST IN )
POSSESSION SETTLEMENT )
in the presence of )
91
<PAGE>
EXECUTED AS A DEED )
by JULIE DIANE ROGERS )
AS TRUSTEE OF THE DAVID )
CHARLES ROGERS INTEREST IN )
POSSESSION SETTLEMENT )
in the presence of )
EXECUTED AS A DEED )
by SAMUEL JOHN SHROUDER )
AS TRUSTEE OF THE SAMUEL )
JOHN SHROUDER INTEREST IN )
POSSESSION TRUST )
in the presence of )
EXECUTED AS A DEED )
by FRIEDA SHROUDER )
AS TRUSTEE OF THE SAMUEL )
JOHN SHROUDER INTEREST IN )
POSSESSION TRUST )
in the presence of )
EXECUTED AS A DEED )
by DAVID CLIFFORD GREGG )
AS TRUSTEE OF THE DAVID )
CLIFFORD GREGG ACCUMULATION )
AND MAINTENANCE TRUST )
in the presence of )
92
<PAGE>
EXECUTED AS A DEED )
by SUZANNE GREGG )
AS TRUSTEE OF THE DAVID )
CLIFFORD GREGG ACCUMULATION )
AND MAINTENANCE TRUST )
in the presence of )
EXECUTED AS A DEED )
by SIMON PAUL GREGG )
AS TRUSTEE OF THE DAVID )
CLIFFORD GREGG ACCUMULATION )
AND MAINTENANCE TRUST )
in the presence of )
93
<PAGE>
EXECUTED AS A DEED )
by JOHN MICHAEL COOK )
AS TRUSTEE OF THE DAVID )
CHARLES ROGERS INTEREST )
IN POSSESSION SETTLEMENT )
in the presence of )
94
