<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) September 17, 1999
SFX ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-14993 13-3977880
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
650 MADISON AVENUE
16TH FLOOR
NEW YORK, NEW YORK 10022
(Address, including zip code, of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 838-3100
No Change
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
SFX ENTERTAINMENT, INC.
ITEM 2. ACQUISITION OF ASSETS.
On September 17, 1999, SFX Entertainment Inc. acquired all of the
oustanding capital stock of Apollo Leisure Group Limited, a privately-held
company, from its shareholders. Apollo operates live theaters and provides
entertainment and leisure management services in the United Kingdom. In addition
Apollo owns Tickets Direct, a telephone operator-based ticketing system. As part
of the transaction, SFX also acquired Barry Clayman Corporation Limited, a
leading promoter of concert and other live entertainment events in the United
Kingdom.
On August 2, 1999, SFX entered into a definitive purchase agreement
with Apollo's shareholders that provided that the acquisition was conditioned on
the receipt by the sellers of tax clearance from Inland Revenue, the U.K.'s tax
authority. The parties were advised that Inland Revenue denied the requested tax
clearance, and the agreement was terminated. SFX and Apollo negotiated an
alternative structure for its acquisition of Apollo that preserved the basic
economic terms of the transaction, and entered into a definitive share purchase
agreement with Apollo's shareholders on September 17, 1999, a copy of which is
attached as Exhibit 10.1 to this report (the "Share Purchase Agreement").
The total purchase price for the acquisition of Apollo was
approximately $256.4 million (based on the exchange rate as of September 17,
1999), comprised of approximately $196.4 million in cash (based on the exchange
rate as of September 17, 1999), 979,667 shares of Class A common stock with a
value of approximately $37.5 million (based on an assumed market price of the
Class A common stock of $38.25 per share) and the assumption of net liabilities
of approximately $22.5 million (based on the exchange rate as of September 17,
1999). The purchase price is subject to certain post-closing adjustments. The
purchase price was determined through arms-length negotiations between the
parties. SFX financed the cash portion of the Apollo acquisition with borrowings
under its new senior credit facility.
The foregoing description of the Share Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Share Purchase Agreement attached as Exhibit 10.1 to this report.
The consolidated financial statements of Apollo Leisure Group and
subsidiaries as of November 28, 1998 and for each of the two years then ended
and as of and for the twenty-four weeks ended May 15, 1999 and May 16, 1998, are
included as Exhibit 99.1 to this report.
ITEM 7. EXHIBITS.
C. Exhibits.
Share Purchase Agreement, dated September 17, 1999, among SFX 10.1
Entertainment, Inc., Anita Gregg, Paul Gregg and certain
other individuals set forth therein.
Consent of Deloitte & Touche 23.1
Consent of Smith Partnership 23.2
Condensed Consolidated Financial Statements of Apollo 99.1
Leisure Group and subsidiaries
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SFX ENTERTAINMENT, INC.
Dated: September 17, 1999 By: /s/ Howard J. Tytel
---------------------------------
Name: Howard J. Tytel
Title: Executive Vice President
General Counsel and Member
of the Office of the Chairman
-3-
<PAGE>
EXHIBIT INDEX
-------------
Description Exhibit
- ----------- -------
Share Purchase Agreement, dated September 17, 1999, among SFX 10.1
Entertainment, Inc., Anita Gregg, Paul Gregg and certain other
individuals set forth therein.
Consent of Deloitte & Touche 23.1
Consent of Smith Partnership 23.2
Condensed Consolidated Financial Statements of Apollo Leisure 99.1
Group and subsidiaries
<PAGE>
DATED SEPTEMBER 17, 1999
(1) ANITA and PAUL GREGG AND OTHERS
(2) SFX ENTERTAINMENT, INC.
(3) SFX U.K. HOLDINGS LIMITED
----------------------------
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> <C>
1. Definitions and Interpretation................................................ 1
2. Sale of Sale Shares........................................................... 8
3. Consideration................................................................. 8
4. Consideration Shares.......................................................... 9
5. Completion.................................................................... 15
6. Completion Accounts........................................................... 18
7. Adjustment of Consideration and Deferred Consideration........................ 20
8. Restriction of Vendors........................................................ 21
9. Warranties.................................................................... 23
10. Covenant in Respect of Tax.................................................... 31
11. Pensions...................................................................... 44
12. Indemnities................................................................... 45
13. The Point..................................................................... 46
14. Restriction on Announcements and Confidentiality.............................. 46
15. Costs......................................................................... 47
16. General....................................................................... 47
17. Notices....................................................................... 49
18. Agent for Service............................................................. 50
19. Governing Law and Submission to Jurisdiction.................................. 50
SCHEDULE 1
The Vendors................................................................... 51
SCHEDULE 2
Details of the Company........................................................ 53
SCHEDULE 3
The Subsidiaries.............................................................. 54
SCHEDULE 4
Part 1........................................................................ 67
The Properties................................................................ 67
Part 2........................................................................ 76
Certificates of Title......................................................... 76
SCHEDULE 5
Part 1........................................................................ 77
Completion Accounts........................................................... 77
Part 2........................................................................ 80
Working Capital Statement..................................................... 80
SCHEDULE 6
Warranties.................................................................... 83
SCHEDULE 7
Part 1 Pension Warranties..................................................... 108
Part 2 Form of Deed of Amendment.............................................. 112
SCHEDULE 8
The Point..................................................................... 114
</TABLE>
<PAGE>
DATE: SEPTEMBER 17, 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
("SFX").
(3) SFX U.K. HOLDINGS LIMITED, a company incorporated in England with
registered number 3805556 whose registered office is at 100 New Bridge
Street, London, EC4V 9JA ("SFX UK"), SFX and SFX UK together being 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 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:
<TABLE>
<S> <C>
"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
1
<PAGE>
there was substituted for the words "the greater part"
wherever they appear the words "twenty five per cent or
more");
"B Shares" as defined in schedule 2;
"Bank Debt" the aggregate amount of bank loans immediately prior to
Completion;
"Barry Clayman Corporation" Barry Clayman Corporation Limited, a company incorporated
in England with registered number 3570610, whose
registered office is at 144 Wigmore Street, London W1H 9FF;
"Cash Consideration" the amount of eighty million four hundred and thirty
thousand pounds ((pound)80,430,000), as adjusted in
accordance with clause 7;
"Certificates" the certificates of title dated 3 August 1999 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 5.1 to 5.4 inclusive;
"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 Date" close of business on 2 October 1999 (except in relation
to the CCL Group where the relevant date will be the
close of business on 30 September 1999);
2
<PAGE>
"Completion Date" the date of this Agreement;
"Confidential Information" know-how, trade secrets and other 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 SFX, 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 Date 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)
other than Bank Debt, 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 2 of
Properties" Schedule 5;
"Directors" the persons listed as directors of the Company in
Schedule 2;
"Disclosure Letter" the letter of 3 August 1999 from the Vendors to SFX;
"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 of any United Kingdom, Irish laws or
legislation enacted
4
<PAGE>
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;
"Long Term Debt" the aggregate amount of 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
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;
"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 subject of
Properties" the Certificates;
"Non-Certificate Property the information summary in respect of the Non-
Summary" Certificate Properties included in the bundle of
documents annexed to the Disclosure Letter at volume 85;
5
<PAGE>
"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 SFX 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" all the issued share capital of the Company as set out
in Schedule 1;
"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)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
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;
6
<PAGE>
"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 shown by the Completion Accounts, less
Bank Debt, and adjusted in accordance with Schedule 5;
"Working Capital Statement" the statement showing the Working Capital prepared and
agreed or determined in accordance with the provisions
of clause 6.
</TABLE>
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
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 their
successors and assigns.
7
<PAGE>
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, 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 LP(MP)A ended after the word "parties" and
as if section 6(2) of LP(MP)A did not apply.
2.4 SFX and SFX UK shall purchase the Sale Shares in equal proportions in
consideration of, in the case of SFX, the Share Consideration and cash,
and in the case of SFX UK, cash.
3. CONSIDERATION
3.1 The consideration payable for the Sale Shares shall be the aggregate of
the Share Consideration, the Deferred Consideration and the Cash
Consideration.
3.2 The Share Consideration shall be satisfied by the allotment and issue of
the Consideration Shares in accordance with clause 5.4.1, the Cash
Consideration shall be
8
<PAGE>
satisfied in cash in accordance with clause 5.3.2 and the Deferred
Consideration shall be satisfied in accordance with clause 7.3.
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
SFX 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 SFX 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 SFX 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 stock of SFX 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 SFX 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 SFX credited as fully
paid with full title guarantee and free
9
<PAGE>
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 SFX 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 SFX 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 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
10
<PAGE>
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, SFX
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 SFX, 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, SFX will cause the
removal of such legend from any Consideration Shares held by the
Vendors.
In addition, each of the Vendors understands that SFX'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 SFX 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
September 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, SFX will cause the
removal of such legend from any Consideration Shares then held by the
Vendors.
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 SFX, the latest available
annual report of SFX on Form 10-K, as amended; any of SFX's
quarterly reports on Form 10-Q filed since such
11
<PAGE>
reports; any of SFX'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 SFX'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 SFX or its representative, concerning
the operations, business and financial condition of SFX, 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;
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;
12
<PAGE>
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 SFX or the Consideration Shares apart from the
information in clause 4.14.
4.13 SFX shall prepare and submit to the New York Stock Exchange, or such
other national securities exchange on which SFX'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
SFX with respect to such listing and any filings made with the SEC by
SFX.
4.14 SFX hereby warrants to each of the Vendors as follows:
4.14.1 SFX 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 SFX hereunder at Completion have been or will be
duly authorised, executed and delivered on behalf of SFX. This
Agreement and all agreements required hereunder to be executed
and delivered on behalf of SFX, constitute the legal, valid and
binding obligations of SFX 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' 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 SFX 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 SFX.
4.14.3 SFX has authorised capital stock of (a) 100,000,000 shares of
Class A common stock, par value $0.01 per share, of which
63,319,143 shares were issued and outstanding and no shares were
held as treasury stock as at close of business on 13 September
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 13 September 1999 and (c) 25,000,000
shares of preferred stock, par value $0.01 per share, of which no
shares were
13
<PAGE>
issued and outstanding as of the date hereof. All of the issued
shares of common stock of SFX have been duly authorised and
validly issued, are fully paid and non-assessable and constitute
the only issued and outstanding voting capital shares of SFX. 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
SFX, free of any restrictions and encumbrances imposed by SFX
except as otherwise provided in this Agreement or by applicable
law, free and clear of all mortgages, pledges or security
interests of SFX 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 SFX 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 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.
4.14.6 No broker or finder has been employed by SFX in consideration
with the transactions contemplated hereby.
4.14.7 The Sale Shares that are to be acquired by SFX 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. SFX acknowledges that
the Sale Shares acquired by it have not been and will not be
registered under the Securities Act or any applicable US state
securities or blue sky laws. SFX 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 SFX in the
Sale Shares. SFX 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.
14
<PAGE>
4.14.8 SFX 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.
4.14.9 In deciding to enter into and consummate the transactions
contemplated hereby, SFX has relied, as to tax, securities and
other legal matters, on the advice it has received from its own
advisers and experts.
4.14.10 SFX understands that there is no public trading market for the
Sale Shares.
5. COMPLETION
5.1 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 5.2, 5.3 and 5.4 shall occur.
5.2 The Vendors shall:
5.2.1 deliver to the Purchaser:
5.2.1.1 duly executed transfers of all of the Sale Shares in
favour of the Purchaser or their nominees together with
the relative share certificates or an indemnity in the
approved terms;
5.2.1.2 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;
5.2.1.3 such waivers or consents as the Purchaser may require to
enable the Purchaser or their nominees to be registered as
holders of any of the Sale Shares and the shares in the
Subsidiaries which are referred to in clause 5.2.1.2;
5.2.1.4 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;
5.2.1.5 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 confirmation from Holohan Associates that they hold
the title deeds to The Point in Dublin;
15
<PAGE>
5.2.1.6 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 Subsidiaries (other than
those Subsidiaries expressly referred to in paragraph 1(b)
of the Disclosure Letter);
5.2.1.7 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;
5.2.1.8 certified copies of any powers of attorney under which any
of the documents referred to in this clause 5.2 is
executed or evidence reasonably satisfactory to the
Purchaser of the authority of any person signing on the
Vendor(s) behalf;
5.2.1.9 the duly executed powers of attorney in respect of the
Sale Shares which are referred to in clause 16.9;
5.2.1.10 except in relation to David Rogers and Paul Gregg, 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 5.2.4 and 5.2.5
below;
5.2.1.11 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
16
<PAGE>
occurred or to have failed to occur, or any conditions
existing or alleged to have existed on or before
Completion;
5.2.1.12 evidence to the Purchaser's reasonable satisfaction that
Barry Clayman Corporation is beneficially owned by a
member of the Group;
5.2.1.13 evidence that the lease of the Alexandra Theatre
Birmingham has been duly stamped;
5.2.2 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;
5.2.3 procure that the amounts set out in the board minutes referred to
in clauses 5.2.4 and 5.2.5 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;
5.2.4 cause the Directors to hold a meeting of the board of the Company
at which the Directors shall pass resolutions (inter alia) to:
5.2.4.1 approve the registration of the Purchaser or their
nominees as members of the Company subject only to the
production of duly stamped and completed transfers in
respect of the Sale Shares;
5.2.4.2 appoint the Purchaser's Accountants as joint auditors of
the Company;
5.2.4.3 appoint such persons as the Purchaser may nominate as
directors and secretary of the Company;
5.2.4.4 approve all financial assistance being given by the
Company; and
5.2.4.5 give authority to such persons as the Purchaser may
nominate to operate the bank accounts.
5.2.5 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:
5.2.5.1 appoint such persons as the Purchaser may nominate as
directors and secretary of the Subsidiaries; and
5.2.5.2 appoint the Purchaser's Accountants as joint auditors of
the Subsidiaries;
17
<PAGE>
5.2.5.3 approve all financial assistance being given by the
Subsidiaries; and
5.2.5.4 give authority to such persons as the Purchaser may
nominate to operate the bank accounts.
5.3 The Purchaser shall:
5.3.1 subscribe in cash nine million pounds ((pound)9,000,000) for B
Shares in the Company; and
5.3.2 pay by telegraphic transfer to the Vendor's Solicitors' bank
account the Cash Consideration (for value that day) and receipt
by the Vendor's Solicitors shall be a complete discharge of the
Purchaser's liability to pay the Cash Consideration.
5.4 SFX shall:
5.4.1 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
5.4.2 provide a letter of support in the approved terms.
5.5 Each of the Vendors hereby agrees to the allocation of the Cash
Consideration and the Consideration Shares as is set out in columns 3
and 4 of Schedule 1.
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.
18
<PAGE>
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 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.
19
<PAGE>
7. ADJUSTMENT OF CONSIDERATION AND DEFERRED CONSIDERATION
7.1 Subject to clause 7.3, 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
and eighty thousand pounds -(pound)50,080,000, which for the
avoidance of doubt means that the amount of the Working Capital
is nearer to nil, the Purchaser 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 and eighty thousand pounds -(pound)50,080,000, 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 an amount equal to such shortfall and interest thereon
as specified in clause 7.2.
7.2 The amount of any excess or shortfall pursuant to clause 7.1 shall
accrue interest from the Completion Accounts Date to the date of payment
at a rate per annum equal to LIBOR. For each month during such period,
"LIBOR" shall be the Interbank Sterling one month mid-rate published in
the Financial Times on the first business day of such month. Interest
payable under this clause 7.2 shall be calculated on the number of days
elapsed and a 365 day year and shall accrue daily and be compounded
monthly.
7.3 In relation to the Deferred Consideration Properties:
7.3.1 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;
7.3.2 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 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.
7.4 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.
20
<PAGE>
7.5 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
7.3. 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 7.3. The
firm of Chartered Accountants will as part of their 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 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
21
<PAGE>
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 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 in accordance with
terms and conditions of the transfer agreement between Houston
Securities Limited and the relevant members of the Group in the
approved terms;
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.
22
<PAGE>
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 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 8.3 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 SFX.
9. WARRANTIES
9.1 As of 3 August 1999 (unless otherwise stated in Schedule 6 and/or part 1
of Schedule 7), the Vendors hereby warrant and undertake to and with the
Purchaser 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
23
<PAGE>
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.
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, 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 SFX 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
24
<PAGE>
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 after
the said two year period, at the option of each of the Vendors, by:
9.5.1 the transfer to SFX 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
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
9.5.2 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 SFX 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 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.
25
<PAGE>
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 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 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 (pound)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(pound)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
(pound)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:
26
<PAGE>
9.9.6.1 where the amount of any individual claim is less than ten
thousand pounds ((pound)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 ((pound)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
9.9.6.2 until the aggregate amount of all claims shall exceed one
million five hundred thousand pounds ((pound)1,500,000)
and in such event the Vendors shall be liable for all
amounts over two hundred thousand pounds ((pound)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 ((pound)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
27
<PAGE>
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).
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 (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 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
28
<PAGE>
provided that the Purchaser shall not be obliged to take any
action whatsoever that 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 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 material adverse effect on the
business of the Group taken as a whole. Notwithstanding the
above, the Purchaser 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-
29
<PAGE>
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;
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 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. 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
30
<PAGE>
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.
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
31
<PAGE>
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 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
32
<PAGE>
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
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 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;
33
<PAGE>
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;
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
34
<PAGE>
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 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);
35
<PAGE>
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 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
36
<PAGE>
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 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
37
<PAGE>
(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;
(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
38
<PAGE>
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 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
39
<PAGE>
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 (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 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
40
<PAGE>
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 hereby covenants with the Vendors to pay to the Vendors an
amount equal to any of the following:
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;
41
<PAGE>
10.12.4 where the Purchaser 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 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;
10.12.5 if any payment required to be made by the Purchaser 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 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:
42
<PAGE>
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 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 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.
43
<PAGE>
10.19 The Vendors and their duly authorised agents shall be responsible for
and have the conduct of preparing and submitting to the Inland Revenue
the return required to be made by the Company under section 250 of the
Income and Corporation Taxes Act 1988 in respect of the dividend
declared by the Company on 8 September 1999 and shall procure that all
information provided in such return shall be true and correct in all
material respects and the Vendors shall have the conduct of any matters
arising as a result of the submission of such return but shall keep the
Purchaser informed of any material correspondence or communications in
connection therewith. The Purchaser shall procure that any
correspondence received by the Company in respect of such return is
forwarded to the Vendors or their duly authorised agents as soon as is
reasonably practicable and shall not agree any matter or enter into any
correspondence with the Inland Revenue in relation to the same without
the prior written consent of the Vendors.
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 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
44
<PAGE>
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 ((pound)50,000). For the avoidance of doubt, if such liability
does exceed fifty thousand pounds ((pound)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 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
45
<PAGE>
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 ((pound)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.
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. THE POINT
The Point, Dublin shall be dealt with in accordance with Schedule 8.
14. RESTRICTION ON ANNOUNCEMENTS AND CONFIDENTIALITY
14.1 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 SFX'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).
14.2 Subject to clause 14.1, 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
46
<PAGE>
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 14.3 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.
14.3 The restrictions contained in clause 14.2 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.
15. COSTS
15.1 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.
15.2 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 has been or is to be borne by the Company or any of the
Subsidiaries.
16. GENERAL
16.1 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.
16.2 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.
16.3 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).
47
<PAGE>
16.4 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.
16.5 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.
16.6 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.
16.7 Save as stated in relation to clauses 9.5, 9.9.1 and 9.9.2 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.
16.8 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 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.
16.9 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.
16.10 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.
16.11 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.
48
<PAGE>
16.12 Nothing contained or implied in this Agreement shall constitute or be
deemed to constitute a partnership or agency relationship between the
parties hereto and none of the parties hereto shall have any authority
to bind or commit any other party hereto.
17. NOTICES
17.1 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.
17.2 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 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.
17.3 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., and SFX U.K. HOLDINGS
LIMITED, 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,
49
<PAGE>
facsimile: (001) 713 427 5099 for the attention
of Amar Budarapu (for the purpose of information
only and not for purpose of Service).
17.4 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.
18. AGENT FOR SERVICE
18.1 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.
18.2 Any document served pursuant to this clause shall be marked for the
attention of:
18.2.1 Baker & McKenzie Ref: TEDG: For the attention of the Litigation
Partner/Service of Process, 100 New Bridge Street, London EC4V
6JA; or
18.2.2 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.
18.3 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 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.
18.4 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 18.3 in
accordance with that clause.
19. 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.
50
<PAGE>
SCHEDULE 1
THE VENDORS
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND ADDRESS OF VENDOR NUMBER OF SALE SHARES NUMBER OF
CONSIDERATION
SHARES
A B C D FOR A SALE
SHARES
<S> <C> <C> <C> <C> <C>
Paul Richard Gregg, Boars Hill 167,022 Nil 529,459 529,459 227,440
Heath, Yarn Way, Boars Hill,
Oxford, England
Anita Kim Gregg, Boars Hill 316,029 Nil 1,001,812 1,001,812 430,348
Heath, Yarn Way, Boars Hill,
Oxford, England
David Charles Rogers, Woodsend, 45,866 Nil 145,395 145,395 62,460
Hamels Lane, Boars Hill, Oxford,
England
Julie Diane Rogers, Woodsend, 25,697 Nil 81,463 81,463 34,991
Hamels Lane, Boars Hill, Oxford,
England
Samuel John Shrouder, Sherbourne 45,866 Nil 145,395 145,395 62,458
House, Lechlade,
Gloucestershire, England
David Clifford Gregg, 21 Coudray 46,248 5,997 138,850 138,850 62,980
Road, Southport, England
Simon Paul Gregg, 10 Duke 53,956 6,996 161,992 161,992 73,475
Street, London SW3, England
DCR Trustees 5,515 17,485 Nil Nil 7,510
SJS Trustees 5,515 17,485 Nil Nil 7,510
DCG Trustees 7,708 914 23,142 23,142 10,495
- ----------------------------------------------------------------------------------------------
TOTAL 719,424 53,401 2,227,181 2,227,181 979,667
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
(4)
AMOUNT OF CASH CONSIDERATION
((Pound))
FOR B SALE FOR C SALE FOR D SALE
SHARES SHARES SHARES
<S> <C> <C>
Nil 18,654,685.10 17,911.36
Nil 35,297,326.85 33,890.86
Nil 5,122,772.38 4,918.86
Nil 2,870,225.29 2,755.86
Nil 5,122,772.38 4,918.65
211,498.08 4,954,250.62 4,756.84
246,730.12 5,779,982.55 5,549.67
616,648.97 Nil Nil
616,648.97 Nil Nil
32,234.32 828,726.77 795.71
- --------------------------------------------
1,723,760.46 78,630,741.94 75,497.60
</TABLE>
52
<PAGE>
SCHEDULE 2
DETAILS OF THE COMPANY
THE COMPANY
<TABLE>
<S> <C> <C>
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: (pound)16,280,582 divided into:
1,579,127 A ordinary shares of (pound)1 each ("A Shares")
11,280,582 B ordinary shares of (pound)1 each ("B Shares")
2,280,582 C ordinary shares of 50p each ("C Shares")
2,280,582 D ordinary shares of (pound)1 each ("D Shares")
5. Issued share capital: (pound)4,113,596.50 divided into :
719,424 A Shares
53,401 B Shares
2,227,181 C Shares
2,227,181 D Shares
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 Ernst & Young
</TABLE>
53
<PAGE>
SCHEDULE 3
THE SUBSIDIARIES
<TABLE>
<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 and Ernst & Young
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and Apollo Leisure Group Limited 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 and Ernst & Young
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of(pound)1 each
10. Issued Share Capital: 100 ordinary shares of(pound)1 each
11. Registered Shareholders and Apollo Leisure Group Limited 100
identity of beneficial owners:
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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of(pound)1 each
10. Issued Share Capital: 2 ordinary shares of(pound)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited
identity of beneficial owners: 2
54
<PAGE>
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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of (pound)1 each
10. Issued Share Capital: 2 ordinary shares of (pound)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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of (pound)1 each
10. Issued Share Capital: 2 ordinary shares of (pound)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 and Ernst & Young,
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of(pound)1 each
10. Issued Share Capital: 100 ordinary shares of(pound)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: Apollo Leisure Group Limited 1
1. Name of Subsidiary: Apollo Theatre (Victoria) Limited
2. Registered Number: 01481278
3. Date and place of Incorporation: 25/02/1980 England & Wales
4. Address of Registered Office: Grehan House, Garsington Road, Cowley,
Oxford, OX4 5NQ
55
<PAGE>
5. Directors: P.R. Gregg, D.C. Rogers, S.J. Shrouder
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership and Ernst & Young
8. Accounting Reference Date: 03/12
9. Authorised Share Capital: 100 ordinary shares of (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: Apollo Leisure Group Limited 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 (pound)1 each
10. Issued Share Capital: 100,000 ordinary shares of (pound)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
56
<PAGE>
7. Auditors: Smith Partnership and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of(pound)1 each
10. Issued Share Capital: 100 ordinary shares of(pound)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: Apollo Leisure Group 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
5. Directors: D.C. Rogers, S.J. Shrouder
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 18,000 ordinary shares of(pound)1 each
10. Issued Share Capital: 18,000 ordinary shares of(pound)1 each
11. Registered Shareholders and Manchester Theatres Limited 17,999
identity of beneficial owners: Apollo Leisure (UK) Limited 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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100 ordinary shares of (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and Apollo Leisure (UK) Limited 99
identity of beneficial owners: Apollo Leisure Group Limited 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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000 ordinary shares of(pound)1 each
10. Issued Share Capital: 150 ordinary shares of(pound)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
7. Auditors: Smith Partnership and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000,000 ordinary shares of(pound)1 each
57
<PAGE>
10. Issued Share Capital: 2 ordinary shares of(pound)1 each
11. Registered Shareholders and Apollo Leisure Group Limited 1
identity of beneficial owners: Apollo Leisure (UK) Limited 1
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(pound)1
10. Issued Share Capital: 50 A ordinary shares and 50 B ordinary
shares each of(pound)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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000,000 ordinary shares of (pound)1 each
10. Issued Share Capital: 100,000 ordinary shares of (pound)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
6. Secretary: D.C. Rogers
7. Auditors: Smith Partnership and Ernst & Young
8. Accounting Reference Date: 30/11
58
<PAGE>
9. Authorised Share Capital: 1,000 ordinary shares of(pound)1 each
10. Issued Share Capital: 1,000 ordinary shares of(pound)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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 5,000 ordinary shares of(pound)1 each
10. Issued Share Capital: 1,000 ordinary shares of(pound)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 and Ernst & Young
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
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(pound)1 each
10. Issued Share Capital: 30,285 ordinary shares of(pound)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
59
<PAGE>
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 (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and Hutchinson Leisure Group of Companies
identity of beneficial owners: Limited 99
Apollo Leisure (UK) Limited 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 (pound)1 each
10. Issued Share Capital: 1,500 ordinary shares of (pound)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
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
60
<PAGE>
6. Secretary: D.C. Rogers
7. Auditors: None
8. Accounting Reference Date: 02/12
9. Authorised Share Capital: 100 ordinary shares of (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and Unit Four Cinemas Limited 99
identity of beneficial owners Hutchinson Leisure Group of Companies
Limited 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 (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and Unit Four Cinemas Limited 99
identity of beneficial owners: Hutchinson Leisure Group of Companies
Limited 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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100,000 ordinary shares of (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 100(pound)1 ordinary shares
249,900 (pound)1 Deferred Ordinary Shares
61
<PAGE>
10. Issued Share Capital: 16 (pound)1 ordinary shares
160,000 (pound)1 Deferred Ordinary Shares
11. Registered Shareholders and Barry Clayman Concerts Limited 15
identity of beneficial owners: David Alan Ballinger 160,000
Barry Clayman Corporation Limited 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 (pound)1 each
10. Issued Share Capital: 1,000 ordinary shares of (pound)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 and Ernst & Young
8. Accounting Reference Date: 30/11
9. Authorised Share Capital: 1,000 ordinary shares of (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)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(pound)1 each
100,000 A ordinary shares
12,550,000 7% Redeemable Cumulative
Preference Shares
500,000 7% Redeemable Cumulative Second
Preference Shares
62
<PAGE>
10. Issued Share Capital: 500,000 ordinary shares of(pound)1 each
30,000 A ordinary shares of(pound)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
identity of beneficial owners: of (pound)1
Harry Crosbie, 249,999 ordinary
shares of (pound)1 each Simon
Crosbie, 1 ordinary share of
(pound)1 Point Presentations
Limited, 30,000 `A' ordinary
shares of (pound)1 each Apollo
UK Limited, 1,025,000 7%
Redeemable Cumulative Preference
Shares of (pound)1 Harry
Crosbie, 1,400,000 7% Redeemable
Cumulative Preference Shares of
(pound)1 Apollo UK Limited,
250,000 7% Redeemable Cumulative
Second Preference Shares (2nd)
of (pound)1 each Point
Presentations Limited, 250,000
7% Redeemable Cumulative Second
Preference Shares (2nd) of
(pound)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(pound)1 ordinary shares divided into
28,430(pound)1 A ordinary shares and 28,320(pound)1 B
ordinary shares
10. Issued Share Capital: 28,430(pound)1 A ordinary shares
28,320(pound)1 B ordinary shares
11. Registered Shareholders and Apollo Leisure (UK) Limited 28,430 A
identity of beneficial owners: ordinary shares
K Milsom 4,885 B ordinary shares
L Milsom 1,884 B ordinary shares
P Reid 1,416 B ordinary shares
Walbrook Trustees (Jersey)
Limited 15,710 B ordinary shares
I Warren 1,416 B ordinary shares
63
<PAGE>
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 (pound)1 each
10. Issued Share Capital: 1,000 ordinary shares of (pound)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 (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)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 (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and City Centre Leisure Limited 100
identity of beneficial owners:
64
<PAGE>
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 (pound)1 each
10. Issued Share Capital: 1,000 ordinary shares of (pound)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 and Ernst & Young
8. Accounting Reference Date: 31/08
9. Authorised Share Capital: 1000 Ordinary shares of(pound)1 each
10. Issued Share Capital: 2 Ordinary shares of(pound)1 each
11. Registered Shareholders and Barry Clayman Concerts Limited 1
identity of beneficial owners: Barry Clayman Corporation Limited 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(pound)1 each
10. Issued Share Capital: 2 ordinary shares of IR(pound)1 each
11. Registered Shareholders and Point Exhibition Company Limited
identity of beneficial owners:
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
65
<PAGE>
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(pound)1 each
10. Issued Share Capital: 2 ordinary shares of IR(pound)1 each
11. Registered Shareholders and Point Exhibition Company Limited 1
identity of beneficial owners: Apollo Leisure Group Limited 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 (pound)1 each
10. Issued Share Capital: 100 ordinary shares of (pound)1 each
11. Registered Shareholders and Apollo Leisure (UK) Ltd 99
identity of beneficial owners: Apollo Leisure Group Limited 1
</TABLE>
66
<PAGE>
SCHEDULE 4
PART 1
THE PROPERTIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL NEXT
DETAILS TERM OF RENTAL RENT
LEASE REVIEW
----- ------
Free Lease
Hold hold
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 LYCEUM West End LH 21.11.88 The Apollo None (pound) None
THEATRE, LONDON Theatre 150 years Theatres Lyceum 10
Trust London per
Limited annum
- -----------------------------------------------------------------------------------------------------------------------
2 VICTORIA West End FH N/a N/a N/a N/a N/a N/a
THEATRE, LONDON Theatre
- -----------------------------------------------------------------------------------------------------------------------
3 PLAYHOUSE Provincial FH N/a N/a N/a N/a N/a N/a
THEATRE, Theatre
EDINBURGH
- -----------------------------------------------------------------------------------------------------------------------
4 LONDON APOLLO, London LH 24.3.64 Land Apollo None (pound) 25.3.2010
HAMMERSMITH Theatre 125 years Securities Leisure 150,000
(Ravenseft) (UK) per
Limited annum
- -----------------------------------------------------------------------------------------------------------------------
5 HOLLYWOOD Cinema FH N/a N/a N/a N/a N/a N/a
PARK, BURNLEY
- -----------------------------------------------------------------------------------------------------------------------
6 CARDIFF Concert and LH 6.7.94 to City and Apollo None (pound) 6.7.2001
INTERNATIONAL Exhibition 25.12.2131 County of Leisure 15,000 Agreed
ARENA Arena and Cardiff (UK) increase
Offices Limited to
(pound)
300,000
per
annum
- -----------------------------------------------------------------------------------------------------------------------
7 PALACE Provincial FH N/a N/a N/a N/a N/a N/a
THEATRE, Theatre
MANCHESTER
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
NO PRESENT OWNER REMARKS
USE
- -------------------------------------------------------
<S> <C> <C> <C>
1 Theatre The Tenant of
and Theatres restaurant is
Restaurant Trust Groupe Chez
Gerrard
Restaurants Plc
- -------------------------------------------------------
2 Theatre Apollo
Leisure
(UK)
Limited
- -------------------------------------------------------
3 Theatre Apollo
Leisure
(UK)
Limited
- -------------------------------------------------------
4 Theatre Ravenseft
Properties
Limited
- -------------------------------------------------------
5 9 Screen Apollo Tenant of
Multiplex Leisure restaurant is
Cinema (UK) Ind Coope
and Limited (Oxford and
Restaurant West) Limited
- -------------------------------------------------------
6 Arena and City and BT and various
Offices County of other tenants
Cardiff have short term
lets on offices
- -------------------------------------------------------
7 Theatre Apollo 999 year lease
Leisure on stage
(UK) extension from
Limited 22.12.80
- -------------------------------------------------------
</TABLE>
67
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL NEXT
DETAILS TERM OF RENTAL RENT
LEASE REVIEW
----- ------
Free Lease
Hold hold
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8 OPERA HOUSE, Provincial FH N/a N/a N/a N/a N/a N/a
MANCHESTER Theatre
- -------------------------------------------------------------------------------------------------------------------
9 BRISTOL Provincial FH N/a N/a N/a N/a N/a N/a
HIPPODROME, Theatre
BRISTOL
- -------------------------------------------------------------------------------------------------------------------
10 SOUTHPORT Provincial LH 12 years Sefton Apollo None Pepper- N/a
THEATRE AND Theatre and from Metropolitan Leisure corn
FLORAL HALL Exhibition 1.4.96 Borough (UK)
COMPLEX, Hall Council Limited
SOUTHPORT
- -------------------------------------------------------------------------------------------------------------------
11 APOLLO BINGO, Bingo Hall FH N/a N/a N/a N/a N/a N/a
RHYL
- -------------------------------------------------------------------------------------------------------------------
12 APOLLO CINEMA, Cinema LH 25 years Denbighshire Apollo N/a (pound) None
RHYL from County Leisure 27,500 + Rent
29.9.95 Council (UK) RPI + linked
(formerly Limited profit to RPI
Rhuddlan share
Borough
Council)
- -------------------------------------------------------------------------------------------------------------------
13 APOLLO Provincial FH N/a N/a N/a N/a N/a N/a
THEATRE, Theatre /
MANCHESTER Music Venue
- -------------------------------------------------------------------------------------------------------------------
14 APOLLO CINEMA, Cinema FH N/a N/a N/a N/a N/a N/a
LEAMINGTON SPA
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
NO PRESENT OWNER REMARKS
USE
- -------------------------------------------------------
<S> <C> <C> <C>
8 Theatre Apollo
Leisure
(UK)
Limited
- -------------------------------------------------------
9 Theatre 1. Apollo
Leisure
(UK)
Limited
(10 + 10a St
Augustines
Parade)
2. Apollo
Cambridge
Theatre
Limited
(main
Theatre)
- -------------------------------------------------------
10 Theatre Sefton MBC
and
Exhibition
Hall
- -------------------------------------------------------
11 Bingo Club Hutchinson 4 lock up shops
Cinemas
(Property)
Limited
- -------------------------------------------------------
12 5 Screen Denbighshire
Multiplex County
Council
- -------------------------------------------------------
13 Theatre Apollo 1 vacant former
Leisure night club
(UK)
Limited
- -------------------------------------------------------
14 4 Screen Hutchinson
Cinema Cinemas
(Properties)
Limited
- -------------------------------------------------------
</TABLE>
68
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL NEXT
DETAILS TERM OF RENTAL RENT
LEASE REVIEW
----- ------
Free Lease
Hold hold
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15 APOLLO CINEMA, Cinema FH N/a N/a N/a N/a N/a N/a
BLACKBURN
- ----------------------------------------------------------------------------------------------------------------------
16 ALEXANDRA Provincial LH 20 years City of Apollo None Premium 1.1.2000
THEATRE, Theatre from Birmingham Leisure of Agreed
BIRMINGHAM 21.2.94 (UK) (pound) rent
Limited 250,000, increase
then (pound)
pepper 50,000
-corn
to
31.12.99
- ----------------------------------------------------------------------------------------------------------------------
17 APOLLO CINEMA, Cinema FH N/a N/a N/a N/a N/a N/a
WALLASEY
- ----------------------------------------------------------------------------------------------------------------------
18 APOLLO Provincial LH 75 years City of Apollo None (pound) No
THEATRE, OXFORD Theatre from Oxford Leisure 600 review
25.12.32 (UK)
Limited
- ----------------------------------------------------------------------------------------------------------------------
19 THE POINT, Concert and FH N/a N/a N/a N/a N/a N/a
DUBLIN Exhibition
Arena
- ----------------------------------------------------------------------------------------------------------------------
20 DOMINION West End LH 125 years Land Neder- (pound) 25.3.2010
THEATRE, LONDON Theatre less Securities lander 296,153
10 days, (Ravenseft) Dominion
from (freeholder) Limited
25.3.64 Butlins
Limited
(head
leaseholder)
- ----------------------------------------------------------------------------------------------------------------------
21 APOLLO CINEMA, Cinema LH 999 years Lancaster Hutchin- None Pepper- None
MORECAMBE from City son corn
1.2.96 Council Leisure
Group of
Companies
Limited
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
NO PRESENT OWNER REMARKS
USE
- -------------------------------------------------------
<S>
15 5 Screen Hutchinson 1 tenanted
Cinema Cinemas restaurant and
(Properties) 1 vacant shop
Limited
- -------------------------------------------------------
<S> <C> <C> <C>
16 Theatre City of
Birmingham
- -------------------------------------------------------
17 6 Screen Hutchinson
Cinema Leisure
Group of
Companies
Limited
- -------------------------------------------------------
18 Theatre, City of
Nightclub Oxford
and Shop
- -------------------------------------------------------
19 Concert Point 50% Apollo
and Arena Exhibition Leisure Group
Co Limited 50% Harry
Crosbie
- -------------------------------------------------------
20 Theatre, Apollo
Shops and Dominion
Offices Investments
Limited
have
33 1/3rd %
interest
in the
Theatre
- -------------------------------------------------------
21 4 Screen Lancaster
Cinema City
Council
- -------------------------------------------------------
</TABLE>
69
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL NEXT
DETAILS TERM OF RENTAL RENT
LEASE REVIEW
----- ------
Free Lease
Hold hold
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
22 GRAND OPERA Provincial FH N/a N/a N/a N/a N/a N/a
HOUSE, YORK Theatre
- -------------------------------------------------------------------------------------------------------------------------
23 GREHAN HOUSE, Head Office LH 21 years Apollo Apollo None (pound) 25.9.99
OXFORD and Finance from Leisure Leisure 87,000 Agents
Department 25.9.94 Pension (UK) recommend
Scheme Limited increase
to
(pound)
145,000
- -------------------------------------------------------------------------------------------------------------------------
24 EMPIRE Provincial LH 124 years Liverpool Apollo N/a Pepper- N/a
THEATRE, Theatre + 340 days City Leisure corn
LIVERPOOL from Council / (UK)
completion Empire Limited
of Theatre
Agreement (Merseyside)
to Lease Trust
Limited
- -------------------------------------------------------------------------------------------------------------------------
25 OLD FIRE Studio LH 9.4.91 to City of Apollo Profit N/a
STATION, OXFORD Theatre and 29.9.2009 Oxford Leisure related
Cafe Bar (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------------
26 LEAS CLIFF Provincial LH 16.9.96 District Apollo None Pepper- n/ a
HALL, Theatre to Council of Leisure corn
FOLKESTONE 31.1.2000 Shepway (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------------
27 PRINCESS Princess LH 60 years Borough of Apollo None Pepper- None
THEATRE, TORBAY Theatre from Torbay Leisure corn
17.11.98 (UK)
Limited
- -------------------------------------------------------------------------------------------------------------------------
28 HOLLYWOOD Multiplex LH New Lease Borough of Apollo None Pepper- From
PARK, TORBAY Cinema will be Torbay Leisure corn 1.12.2010
(currently from (UK) until (pound)
under 20 days Limited 30.11.201 50,000 pa
construction) after 5-yearly
Practical reviews
Completion, RPI
for
60 years
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------
NO PRESENT OWNER REMARKS
USE
- ------------------------------------------------------------
<S> <C> <C> <C>
22 Theatre Apollo
Leisure
(UK)
Limited
- ------------------------------------------------------------
23 Office Apollo
Leisure
Pension
Scheme
- ------------------------------------------------------------
24 Theatre Liverpool
City
Council
- ------------------------------------------------------------
25 Theatre City of Proposed scheme
and Cafe Oxford to
Bar substantially
refurbish
building linked
to new Lease
- ------------------------------------------------------------
26 Theatre District New
Council of refurbishment
Shepway scheme linked
to Management
Contract
- ------------------------------------------------------------
27 Theatre Borough of
Torbay
- ------------------------------------------------------------
28 Cinema Borough of
under Torbay
construction
- ------------------------------------------------------------
</TABLE>
70
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL NEXT
DETAILS TERM OF RENTAL RENT
LEASE REVIEW
----- ------
Free Lease
Hold hold
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
29 APOLLO CINEMA 3 Screen FH N/a N/a N/a N/a N/a N/a
AND BINGO, Cinema and
CREWE Bingo Club
- --------------------------------------------------------------------------------------------------------------------------
30 HOLLYWOOD 6 Screen LH 125 Neath Port Apollo N/a (pound) N/a
PARK, PORT Cinema years Talbot Leisure 15,625
TALBOT from County (UK) for
30.11.98 Borough Limited first
Council 10
years
(pound)1
thereafter
- --------------------------------------------------------------------------------------------------------------------------
31 PALLADIUM Bingo Hall LH Lease Mostyn Hutchinson N/a (pound) N/a
CINEMA AND and Cinema ending Estates Cinemas 35
BINGO, 2913 (Properties)
LLANDUDNO Limited
- --------------------------------------------------------------------------------------------------------------------------
32 PRINCE OF 21 Bedroom FH N/a N/a N/a N/a N/a N/a
WALES HOTEL, Hotel
CAERNARFON
- --------------------------------------------------------------------------------------------------------------------------
33 DELIBERATELY
LEFT BLANK
- --------------------------------------------------------------------------------------------------------------------------
34 UNIT 4 CINEMA, Vacant Cinema FH N/a N/a N/a N/a N/a N/a
BRIERFIELD
- --------------------------------------------------------------------------------------------------------------------------
35 PORT TALBOT Warehouse LH 999 years Scotts Apollo N/a Pepper- N/a
STORE, PORT from Leisure corn
TALBOT 14.8.89 (UK)
Limited
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------
NO PRESENT OWNER REMARKS
USE
- ------------------------------------------------------
<S> <C> <C> <C>
29 Cinema Hutchinson
and Bingo Cinemas
Club (Properties)
Limited
- ------------------------------------------------------
30 Multiplex Neath Port
Cinema Talbot
and County
Development Borough
Site Council
- ------------------------------------------------------
31 Bingo Hutchinson 7 tenanted shops
Hall and Cinemas
Cinema (Properties)
Limited
- ------------------------------------------------------
32 Hotel Hutchinson
Cinemas
(Properties)
Limited
- ------------------------------------------------------
33
- ------------------------------------------------------
34 Vacant Hutchinson
Cinema Group of
Companies
Limited
- ------------------------------------------------------
35 Warehouse Apollo Agreed sale of
Leisure warehouse and
(UK) land for
Limited (pound)296,000
- ------------------------------------------------------
</TABLE>
71
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL NEXT
DETAILS TERM OF RENTAL RENT
LEASE REVIEW
----- ------
Free Lease
Hold hold
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36 ASTRA CINEMA, 4 Screen FH N/a N/a N/a N/a N/a N/a
BARROW Cinema
- --------------------------------------------------------------------------------------------------------------------------
37 PLAZA BINGO, Bingo Club FH N/a N/a N/a N/a N/a N/a
WIDNES
- --------------------------------------------------------------------------------------------------------------------------
38 PALLADIUM Bingo Club FH N/a N/a N/a N/a N/a N/a
BINGO,
BLACKPOOL
- --------------------------------------------------------------------------------------------------------------------------
39 TATTON CINEMA, 3 Screen FH N/a N/a N/a N/a N/a N/a
GATLEY Cinema
- --------------------------------------------------------------------------------------------------------------------------
40 HEN & Public House LH 10 years Ind Coope Apollo N/a (pound) None
CHICKENS, from (Oxford Leisure 80,000
BIRMINGHAM 14.9.92 and West) (UK)
Limited Limited
- --------------------------------------------------------------------------------------------------------------------------
41 PALACE BINGO, Bingo Hall LH 21 years Warrington Hutchinson N/a (pound) N/a
WARRINGTON from Borough Cinemas 12,000
1.1.78 Council (Properties)
Limited
- --------------------------------------------------------------------------------------------------------------------------
42 UNIT 4 CINEMA, 4 Screen LH 21 years Liverpool Unit 4 David (pound) 15.1.2001
WALKDEN Cinema from and Cinemas Tattersall 17,000
13.1.86 Lancashire Limited and
Properties Joyce
Limited Tattersall
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------
NO PRESENT OWNER REMARKS
USE
- ----------------------------------------------------
<S> <C> <C> <C>
36 Vacant Hutchinson Cinema and 4
former Cinemas shops currently
Cinema (Properties) for sale
Limited
- ----------------------------------------------------
37 P Vacant Hutchinson Currently for
Bingo Hall Cinemas sale
(Properties)
Limited
- ----------------------------------------------------
38 Bingo Hall Hutchinson
Group of
Companies
Limited
- ----------------------------------------------------
39 Cinema Hutchinson
Group of
Companies
Limited
- ----------------------------------------------------
40 Public Ind Coope
House/ (Oxford
Nightclub and West)
Limited
- ----------------------------------------------------
41 Vacant Warrington Ongoing
Bingo Hall Borough negotiations
Council with Council
regarding
alternative uses
- ----------------------------------------------------
42 Cinema Liverpool
and
Lancashire
Properties
Limited
- ----------------------------------------------------
</TABLE>
72
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL
DETAILS TERM OF RENTAL
LEASE
----- ------
Free Lease
Hold hold
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
43 PLAZA CINEMA & 2 Screen FH N/a N/a N/a N/a N/a
BINGO, BANGOR Cinema and
Vacant Bingo
Club
- --------------------------------------------------------------------------------------------------------------
44 APOLLO CINEMA, 3 Screen LH Long Budget Hutchinson N/a (pound)
STAFFORD Cinema leasehold Howarth Cinemas 400
into (Properties)
perpetuity Limited
- --------------------------------------------------------------------------------------------------------------
45 HOLLYWOOD 6 Screen LH 25 years Positive Apollo N/a (pound)
PARK, BARROW Cinema from Location Leisure 59,500
25.12.98 Properties (UK)
Limited Limited
- --------------------------------------------------------------------------------------------------------------
46 EMPIRE BINGO, Bingo Club N/a N/a N/a N/a N/a
CAERNARFON
- --------------------------------------------------------------------------------------------------------------
47 COPPULL Regional LH 3 years Palatine Apollo N/a (pound)
OFFICES, Office from Developments Leisure 18,350
COPPULL, 1.3.99 Limited (UK)
CHORLEY Limited
- --------------------------------------------------------------------------------------------------------------
48 134 WIGMORE Former
STREET, LONDON offices, now
vacated at
end of lease
- --------------------------------------------------------------------------------------------------------------
49 144 WIGMORE Offices for LH 25 years Zaison Apollo N/a (pound)
STREET, LONDON BCC / Apollo from Investments Leisure 41,500
Productions 25.12.86 Limited (UK)
Limited
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------
NO NEXT PRESENT OWNER REMARKS
RENT USE
REVIEW
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
43 N/a Cinema/ Hutchinson 3 vacant shops
vacant Cinemas
Bingo Club (Properties)
Limited
- ---------------------------------------------------------------
44 N/a 3 Screen Budget
Cinema Howarth
- ---------------------------------------------------------------
45 25.12.2003 6 Screen Positive
Cinema Location
Properties
Limited
- ---------------------------------------------------------------
46 N/a Bingo Club Hutchinson
Cinemas
(Properties)
Limited
- ---------------------------------------------------------------
47 N/a Offices Palatine
Developments
Limited
- ---------------------------------------------------------------
48
- ---------------------------------------------------------------
49 1.1.2006 Offices Superior
Lessee
Zaison
Investments
Limited
- ---------------------------------------------------------------
</TABLE>
73
<PAGE>
SCHEDULE 4
PART 1 - THE PROPERTIES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
NO PROPERTY DESCRIPTION TENURE DATE & LANDLORDS TENANT SURETY ANNUAL
DETAILS TERM OF RENTAL
LEASE
----- ------
Free Lease
Hold hold
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 TICKETS Offices LH New lease Nederlander Apollo - (pound)
LONDON, LONDON being Dominion Leisure 13,000
prepared Limited (UK)
Limited
- ----------------------------------------------------------------------------------------------------------
51 TICKETS Offices LH 7 years Drew Apollo - (pound)
DIRECT, from Investments Leisure 59,346
MANCHESTER 25.3.94 Limited (UK)
Limited
- ----------------------------------------------------------------------------------------------------------
52 BOARS HILL Offices Licence Ongoing Mrs Gregg Apollo - (pound)
HEATH, OXFORD Leisure 50,000
(UK) + RPI
Limited
- ----------------------------------------------------------------------------------------------------------
53 SPA PAVILION, Provincial LH 20 years Suffolk Apollo N/a (pound)
FELIXSTOWE Theatre from Coastal Leisure 18,000
3.6.96 District (UK)
Council Limited
- ----------------------------------------------------------------------------------------------------------
54 BECK THEATRE, London Management 15 years London Apollo N/a -
HAYES Theatre Agreement from Borough of Leisure
and Licence 1.4.92 Hillingdon (UK)
Limited
- ----------------------------------------------------------------------------------------------------------
55 WYVERN Provincial Management 10 years Swindon Apollo N/a N/a
THEATRE, Theatre Agreement from Council Leisure
SWINDON 25.3.94 (UK)
Limited
- ----------------------------------------------------------------------------------------------------------
56 TAMESIDE Provincial Management 15 years Tameside Apollo N/a N/a
HIPPODROME, Theatre Agreement from Metropolitan Leisure
TAMESIDE 1.10.92 Borough (UK)
Council Limited
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------
NO NEXT PRESENT OWNER REMARKS
RENT USE
REVIEW
- ---------------------------------------------------------------
<S> <C> <C>
50 Offices Nederlander
Dominion
Limited
- ---------------------------------------------------------------
51 None Call Drew
Centre Investments
Limited
- ---------------------------------------------------------------
52 Linked Offices Mrs Gregg
to RPI
- ---------------------------------------------------------------
53 None Theatre Suffolk
Coastal
District
Council
- ---------------------------------------------------------------
54 - Theatre London
Borough of
Hillingdon
- ---------------------------------------------------------------
55 N/a Theatre Swindon
Council
- ---------------------------------------------------------------
56 N/a Theatre Tameside
Council
- ---------------------------------------------------------------
</TABLE>
74
<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>
57 FUTURIST, Provincial Management Scarborough N/a N/a
SCARBOROUGH Theatre Agreement Borough
No formal Council
lease in
place
- ------------------------------------------------------------------------------------------------
58 SHEFFIELD Concert and Management Sheffield N/a N/a
ARENA, Exhibition Agreement City Trust
SHEFFIELD arena
- ------------------------------------------------------------------------------------------------
59 CLARENCE HOTEL Vacant Flat FH N/a N/a N/a N/a
- FLAT,
LLANDUDNO
- ------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------
NO ANNUAL NEXT PRESENT OWNER REMARKS
RENTAL RENT USE
REVIEW
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
57 N/a N/a Theatre Scarborough
Borough
Council
- --------------------------------------------------------------------------
58 N/a N/a Concert Sheffield
and Arena City Trust
- --------------------------------------------------------------------------
59 N/a N/a Vacant Hutchinson Formally
flat Cinemas Manager's flat
(Properties) for Clarence
Limited Hotel (sold
separately)
- --------------------------------------------------------------------------
</TABLE>
75
<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
76
<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 (pound)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.
77
<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 5.2.3 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 5.3.3 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 5.2.3 of this
Agreement only to the extent that these payments have not been paid by
the Completion Accounts Date.
78
<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 members 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.
79
<PAGE>
PART 2
WORKING CAPITAL STATEMENT
The Working Capital Statement shall be prepared in accordance with the policies
set out in (i) to (viii) 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
80
<PAGE>
Subject to clause 7.3 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 (pound)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 (pound)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 ((pound)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 B
Shares in the Company in accordance with clause 5.3.1 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.
81
<PAGE>
(vii) BANK DEBT
Bank Debt will be calculated as at the Completion Date but shall have
added to it an amount equivalent to the interest that the Group would
have paid between Completion and the Completion Accounts Date had the
Bank Debt not been paid off at Completion.
For the avoidance of doubt no amount in respect of breakage costs will
be included in the calculation of Bank Debt.
(viii) INTEREST
Working Capital shall be decreased (which for the avoidance of doubt means that
the amount of the Working Capital will be made a larger negative number) by two
hundred thousand pounds ((pound)200,000) to reflect notional interest on the
Consideration from Completion to the Completion Accounts Date (inclusive).
82
<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 Hutchinson
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 Hutchinson 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;
83
<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
84
<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;
85
<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.
86
<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
87
<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.
88
<PAGE>
SCHEDULE 8
THE POINT
In this Schedule references to paragraphs are references to paragraphs in this
Schedule and the following expressions shall have the following meanings:
"Adjusted Point Consideration" the meaning given to that term in paragraph
3 of this Schedule;
"Assurance" the document containing the easements and
covenants referred to in paragraph 5 which
transfers the title to the Development Land
to the Developer;
"Business" the business carried on by PEC at the Venue
from time to time;
"Contract" the contract (to be negotiated by the
Vendors on behalf of PEC) to be entered into
between PEC and the Developer for the sale
of the Development Land;
"Developer" the person or persons carrying out the
Development;
"Development" the Venue Development and the Point Village
Development to be carried out on the
Development Land and the Venue Development
Land in accordance with the Satisfactory
Planning Permission;
"Development Land" that part of the land owned by PEC at
the Completion Date on which it is proposed
to carry out the Point Village Development
excluding the Venue Development Land and the
Venue;
"Estimated Management Fee" an amount equal to fifty per cent (50%), if
the Estimated Management Fee is to be paid
by the Vendors to the Purchaser, or one
hundred per cent (100%), if the Estimated
Management Fee is to be paid under the
Contract by the Developer to PEC, of the sum
of the Purchaser's reasonable estimates of:
(i) all and any amounts that will be
incurred by PEC in handing over the
Venue for the Handover Period
including without limitation any
cancellation of booking fees; plus
(ii) the amount of the earnings earned by
PEC for the twelve month period
ending at the monthly management
accounting period end immediately
prior to the Handover Date being
calculated before and without giving
effect to interest, tax,
89
<PAGE>
depreciation and amortisation
divided by 365 and then multiplied
by the number of days that make up
the Handover Period; plus
(iii) any payments which PEC could
reasonably be obliged to make during
the Handover Period less any income
which PEC could reasonably be
expected to receive, both regardless
of the handover of the Venue; less
(iv) any savings which could reasonably
be expected to be made during the
Handover Period, provided always
this shall not require PEC to
terminate the employment of any
permanent employees employed by PEC
at the Venue on the Handover Date;
"Handover Date" the date of the handover of the Venue to
enable the Venue Development;
"Handover Notice" the written notice to be served on
the Purchaser and PEC pursuant to paragraph
4 by the Vendors or the Developer (as the
case may be), giving no less than 12 months'
notice of the Handover Date and the Handover
Period;
"Handover Period" the period during which it is
envisaged at the date of the Handover Notice
the Venue has to be handed over for the
purpose of carrying out the Venue
Development commencing on the Handover Date;
"Joint Venture Agreement" the joint venture
agreement made between Harry Crosbie ("Mr
Crosbie"), PEC and the Company relating to
PEC dated 15 March 1989 as amended from time
to time;
"Management Fee" the amount agreed or determined to be
payable to the Purchaser by the Vendors or
to PEC by the Developer under the Contract
(as the case may be) in accordance with the
provisions of paragraphs 11 to 14 in
consideration of the Purchaser or PEC (as
the case may be) delivering up the Venue
from the Handover Date to the Open Date and
being derived from the amounts actually
incurred, earned or made (as the case may
be) in respect of the items estimated in
calculating the Estimated Management Fee;
"Onerous Condition" any condition or restriction contained in
any planning permission for the Point
Village Development or a covenant, condition
or restriction contained in or
90
<PAGE>
imposed by a Planning Agreement the effect
of which is not acceptable to the Vendors in
their sole joint discretion;
"Open Date" the date of practical completion of the
Venue Development to the reasonable
satisfaction of the Purchaser as certified
by the architect under any building contract
relating to the Venue Development and also
in a state and condition where the same can
be reopened and be fully operational and
after all necessary final approvals of the
relevant competent authorities have been
obtained for the use and operation of the
Venue in substantially the same manner as it
was used and operated prior to the Handover
Date;
"PEC" Point Exhibition Company Limited;
"Planning Agreement" any agreement with the planning authority or
other competent authority regulating the
Point Village Development whether or not
pursuant to Section 38 of the Local
Government (Planning & Development) Act,
1963 or otherwise as may be required by the
competent planning authority or any
statutory or service undertaker to enable a
planning permission for the Development to
be granted;
"Point Consideration" an amount equal to fifty per cent (50%) of
the amounts received by PEC on the sale of
the Development Land less an amount equal to
fifty percent (50%) of the Purchaser's good
faith reasonable estimate of:
(i) all and any costs incurred by PEC
which are referable to site assembly
and the obtaining of all and any
licences, consents and permissions
as are deemed necessary by PEC in
order to facilitate the entry into
the Contract and the Assurance;
(ii) all associated reasonable selling
costs incurred in connection with
the Development Land;
(iii) the amount of any Tax payable as a
result of or by reference to the
disposal by PEC of the Development
Land;
(iv) the amount of any costs and Tax that
would be incurred in transferring
the proceeds of sale (whether by way
of dividend or otherwise) to the
Purchaser from PEC;
91
<PAGE>
(v) any and all costs that would be
incurred by PEC in undertaking the
Venue Requirements; and
(vi) all and any other costs and
liabilities undertaken or incurred
by PEC or arising in connection with
any contract entered into with the
Developer or any other person at the
request of the Developer all
relating to the Development;
"Point Consideration Loan Notes" the guaranteed loan notes to be issued in
accordance with paragraph 3 which shall be
substantially in the form of loan notes in
the approved terms save as to the rate of
interest, which shall be the best rate of
interest reasonably obtainable by the
Purchaser by depositing an amount in cash
equal to the Point Consideration with a UK
or Republic of Ireland clearing bank;
"Point Village Development" the redevelopment of
the land owned by PEC surrounding the Venue
and the Venue Development Land to
incorporate a mixed retail and leisure
development together with residential
apartments and a hotel to comprise
approximately 1.25 million square feet of
space on the Development Land;
"Point Village Development Land" the Development Land and the Venue
Development Land;
"Professional Team" the architect, the building contractor, the
structural engineer, the mechanical and
electrical engineer, the acoustic
consultant, the theatre consultant and all
other professionals appointed by or on
behalf of the Developer or the Vendors from
time to time in connection with the Venue
Development;
"Satisfactory Planning Permission" a full planning
permission including any associated Planning
Agreement which is free from an Onerous
Condition and permits the Development and
otherwise is satisfactory in all respects to
the Vendors;
"Security" a performance bond or letter of credit or a
guarantee or some other form of security
reasonably commercially acceptable to the
party in whose favour it is granted in
respect of the Venue Development in an
amount equal to the full costs of the Venue
Development;
"Venue" the Point Theatre, Dublin including without
limitation the building known as the Point
Theatre, together with all easements, rights
privileges and appurtenances benefiting the
land upon which the Point Theatre is erected
and all improvements and betterments
utilised
92
<PAGE>
in the use, operation, maintenance and
repair of the Point Theatre at the Handover
Date;
"Venue Development" the refurbishment of the Venue
as part of the Point Village Development in
accordance with the Satisfactory Planning
Permission and other permissions and the
Venue Requirements;
"Venue Development Land" that part of the land
currently owned by PEC on which the Venue
Development will take place and the
refurbished Venue will stand;
"Venue Requirements" the brochure entitled "Venue
Requirements" for the design and
redevelopment of the Venue dated July 1999,
as amended by agreement between the Vendors
and the Purchaser from time to time.
In this Schedule where the expression "materially and adversely affect the use,
repair and replacement of the Venue" is used it shall mean any right, event or
circumstance which might reasonably be expected to:
(i) limit the ability of PEC to stage or promote at the then market
rate attractions of the type which have historically played at or
performed at the Venue; or
(ii) increase materially the cost to PEC of the maintenance, repair or
replacement of the Venue or any part thereof,
where such right, event or circumstance would not have arisen or to the extent
it would not have arisen, but for the Development.
1. Subject to paragraph 5 and subject to the Vendors procuring any
necessary consents, including from the parties to the Joint Venture
Agreement (other than any party to that agreement that is at the
relevant time a member of the Group) the Vendors may serve notice in
writing on the Purchaser and PEC within two months of the grant of a
Satisfactory Planning Permission and all other conditions under the
Contract being either satisfied or waived but no later than the fifth
(5th) anniversary of the Completion Date, requiring the Purchaser (so
far as it is able within the terms of the Joint Venture Agreement and
the articles of association of PEC by the exercise of control over the
voting rights held by any member of the Group in respect of the capital
of PEC) to procure the transfer by PEC to the Developer, or as the
Developer may otherwise direct, the same right, title and interest in
the Development Land as is held by PEC as at Completion, provided that:
1.1 the Purchaser shall be under no obligation when procuring such transfer
to remove any matters of title that have arisen other than through the
actions or omissions of the Purchaser; and
1.2 if an application for judicial review of the Satisfactory Planning
Permission is made the transfer will not take place until the
Satisfactory Planning Permission is upheld.
93
<PAGE>
2. Subject to paragraph 5, the Purchaser shall (so far as it is able within
the terms of the Joint Venture Agreement and the articles of association
of PEC by the exercise of control over the voting rights held by any
member of the Group in respect of the capital of PEC) procure that:
2.1 PEC shall act promptly, on the reasonable instructions of Paul Gregg and
David Rogers, in relation to the transfer of the Development Land to the
Developer and the terms of the Assurance which instructions must, for
the avoidance of doubt, be consistent with the terms of this Schedule,
unless otherwise agreed; and
2.2 Paul Gregg and David Rogers are given reasonable access at all
reasonable times to PEC's papers and documents relating to the
Development Land.
3.1 Within 7 business days of the Vendors notifying the Purchaser that the
proceeds of sale of the Development Land under the Contract have been
received into the Development Account (as defined in paragraph 10.12)
the Purchaser shall procure that the Point Consideration shall be
satisfied (without any counterclaim or set off) by the issue, by the
Purchaser (as the Purchaser shall determine), to the Vendors in the same
proportions as set out in column 4 of Schedule 1, of the Point
Consideration Loan Notes, in an aggregate principal amount equal to the
Point Consideration. The Vendors shall be responsible for the costs of
obtaining the guarantee of the Point Consideration Loan Notes.
3.2 Within 60 days of the Open Date the Purchaser shall deliver to the
Vendors a draft statement showing the calculation of a sum, such sum
being fifty per cent (50%) of the amounts received by PEC on the sale of
the Development Land less an amount equal to fifty per cent (50%) of:
(a) the amount of the costs and liabilities described in the
definition of the Point Consideration as have actually been
incurred by PEC by the date of the draft statement; and
(b) the amount of the Tax described in that definition as has
actually been paid or become due and payable by that date or, if
it has not by that date been paid or become due and payable, the
estimated amount thereof.
3.3 The Vendors shall within 30 days of receipt of such draft statement
review the same and deliver a written notice to the Purchaser stating
either that they agree with the draft statement of the sum or that they
disagree and, if so, in what respect they disagree and stating their
reasons for their disagreement and their calculation of the sum.
3.4 If the Purchaser disagrees with the Vendors' notice of disagreement and
if the Purchaser and the Vendors cannot reach agreement within 30 days
of the date of the Vendors' notification of disagreement, the matter
shall be referred to an independent firm of chartered accountants and
the provisions of paragraph 6.5 of the Agreement shall apply mutatis
mutandis. The sum as so determined or agreed between the Vendors and the
Purchaser shall be the "Adjusted Point Consideration". The firm of
chartered accountants that makes the determination, if any, will as part
of their
94
<PAGE>
decision determine what proportion of their costs should be borne by the
Vendors and the Purchaser.
3.5 Within 7 days of the agreement or determination of the amount of the
Adjusted Point Consideration in accordance with paragraph 3.4:
3.5.1 if the amount of the Adjusted Point Consideration exceeds the
Point Consideration, the Purchaser will pay an amount equal to
such excess to the Vendors, together with interest thereon at the
same rate of interest as applied to the monies held in the
Development Account for the period from the date of issue of the
Point Consideration Loan Notes under paragraph 3.1 to the date of
payment;
3.5.2 if the amount of the Adjusted Point Consideration is less than
the Point Consideration, the Vendors will pay an amount equal to
such shortfall to the Purchaser together with interest thereon at
the rate payable on the Point Consideration Loan Notes from the
date of the issue of the Point Consideration Loan Notes under
paragraph 3.1 to the date of payment.
3.6 Any amounts payable:
3.6.1 by the Purchaser under paragraph 3.5.1 shall be satisfied in cash
or, at the option of the Vendors, in additional Point
Consideration Loan Notes, in the same proportions as set out in
column 4 of Schedule 1;
3.6.2 by the Vendors under paragraph 3.5.2 shall be satisfied in the
same proportions as set out in column 4 of Schedule 1 by the
cancellation of Point Consideration Loan Notes in a principal
amount equal to the amount so payable or, to the extent that the
Vendors no longer hold Point Consideration Loan Notes, in cash
provided that, if any of the Vendors so elect, any amounts
payable by such persons under paragraph 3.5.2 shall be satisfied
by payment in cash.
3.7 Notwithstanding anything else in this Agreement the Purchaser agrees
that it will use all reasonable endeavours to work with the Vendors to
achieve in the most tax effective manner the realisation of the Vendors'
rights to receive the Point Consideration (as adjusted by paragraphs 3.2
to 3.6) PROVIDED that in so doing neither the Purchaser nor any member
of the Purchaser's Group or the Group is financially disadvantaged.
4. The Purchaser acknowledges that the Venue will need to be handed over to
the Developer for the Handover Period for the purposes of the Venue
Development and that the Vendors or the Developer (as the case may be)
may at any time prior to the expiry of twelve (12) months from the later
of the date of receipt of Satisfactory Planning Permission and the date
of the Assurance but in no event later than the fifth (5th) anniversary
of the Completion Date serve the Handover Notice Provided that the
Purchaser shall (so far as it is able within the terms of the Joint
Venture Agreement and the articles of association of PEC by the exercise
of control over the voting rights held by any member of the Group in
respect of the capital of PEC) only be obliged to procure the handover
and vacation of the Venue in its entirety on the later of the
95
<PAGE>
Handover Date and the date of payment of the Estimated Management Fee.
The Estimated Management Fee will be paid on the Handover Date. The
Vendors shall pay the Estimated Management Fee save where the Developer
is required to pay the same to PEC under the Contract. The Purchaser
shall and shall procure that PEC (so far as it is able within the terms
of the Joint Venture Agreement and the articles of association of PEC by
the exercise of control over the voting rights held by any member of the
Group in respect of the capital of PEC) shall co-operate with the
Vendors and the Developer and the Vendors shall and shall procure that
the Developer shall co-operate with the Purchaser and PEC to obtain all
necessary approvals of the relevant competent authorities for the
re-opening of the Venue.
5. The Vendors shall be entitled to negotiate on behalf of PEC the terms of
the Contract and the Assurance and the Purchaser shall procure that PEC
(so far as it is able within the terms of the Joint Venture Agreement
and the articles of association of PEC by the exercise of control over
the voting rights held by any member of the Group in respect of the
capital of PEC) enters into the Contract and the Assurance within seven
(7) days of being notified that it is ready for signature PROVIDED THAT
the Purchaser shall not be obliged to enter, nor shall it be obliged to
procure (so far as it is able within the terms of the Joint Venture
Agreement and the articles of association of PEC by the exercise of
control over the voting rights held by any member of the Group in
respect of the capital of PEC) that PEC enters into the Contract or the
Assurance unless the Contract and the Assurance:
5.1 reserves for the benefit of the Venue in perpetuity all rights and
easements required to enable the Business to operate after practical
completion of the Development in substantially the same manner as it was
operated (when fully operational) at and prior to the Handover Date
including without limitation rights of way both vehicular and
pedestrian, water, drainage, gas, electricity, telephone, conducting and
other media and services, support and protection, right of entry for
repair and maintenance and car parking as specified in the Venue
Requirements (in respect of which PEC shall be entitled to receive the
income) all to be provided as part of the Venue Development. The
Assurance will also grant to the Developer such similar rights
(excluding rights of way and car parking) as are necessary for the use
of the Development Land provided the same do not materially and
adversely affect the use, repair and replacement of the Venue;
5.2 contains binding covenants by the Developer:
5.2.1 not to develop the Development Land in such a manner or grant
rights that materially and adversely affect the use, repair and
replacement of the Venue;
5.2.2 not to develop the Development Land for uses that compete with
the Venue, which, for these purposes shall mean any large scale
live entertainment that might compete with the Business as such
business has been carried on from time to time in the five (5)
years immediately prior to the later of the date of the Contract
or the Completion Date;
5.2.3 to carry out and complete the Venue Development and the Point
Village Development in a good and workmanlike manner with all due
expedition and in accordance with all legal and statutory
requirements, authorisations,
96
<PAGE>
covenants and permits, including the Satisfactory Planning
Permission, and in addition in the case of the Venue Development
in accordance with the Venue Requirements and to a state of
completion of works as required for the Open Date;
5.2.4 to obtain the Security in favour of PEC;
5.2.5 a full and sufficient indemnity in favour of PEC in relation to
any and all liabilities, losses, costs or claims of any nature
whatsoever arising in relation to any Planning Agreement or other
deeds and documents entered into by PEC pursuant to paragraph 7;
5.2.6 up to practical completion to insure the Venue Development in
terms reasonably satisfactory to PEC and to procure that PEC's
interest in the Venue and the Venue Development Land is noted on
the Developer's policies of insurance;
5.2.7 to procure that each member of the Professional Team provides
warranties to PEC in a form reasonably acceptable to the
Purchaser;
5.2.8 to keep the Purchaser advised of the progress of the Development
and promptly to advise the Purchaser of any problems or if there
is likely to be an extension of the estimated Handover Period as
soon as the Developer becomes aware of the same;
5.2.9 to allow the Purchaser and the Purchaser's surveyor to have
reasonable access to the Venue during the course of the Venue
Development at reasonable times and on reasonable notice to
enable inspection of the Venue Development and to allow the
Purchaser to make representations to the Professional Team; and
5.2.10 to make available to the Venue 182 car parking spaces in addition
to those referred to in the Venue Requirements on the Development
Land provided that the income in respect of the same shall not
belong to PEC;
5.3 provides that:
5.3.1 PEC shall at all times be permitted to continue to run and manage
the Business as it shall in its sole discretion think fit until
the later of the Handover Date and the payment of the Estimated
Management Fee. In the event that any part of the Venue stands on
the Development Land, PEC will be given the right to use that
land and the buildings thereon and the services and facilities
within it for the purposes of the Business until the later of the
Handover Date and the Payment of the Estimated Management Fee;
and
5.3.2 subject to the payment of the Estimated Management Fee, PEC shall
give an irrevocable licence to the Developer, its contractors and
third parties authorised by it to enter the Venue in order to
carry out the Development. Such licence will include and permit
the carrying out of surveys, soil tests or other investigations
in connection with the Development and the carrying out of works
of demolition, clean up, redevelopment, building, construction
and
97
<PAGE>
the like in connection with the Development, all to be carried
out at the Developer's cost and in accordance with the covenants
set out in the Contract and the Assurance.
6. The Vendors will procure that on the Handover Date:
6.1 the Developer will have provided the Security in favour of PEC;
6.2 there shall have been granted to PEC the right to enforce the Security
and to step in to complete the Venue Development in the event that the
Developer:
6.2.1 fails to complete the Venue Development in accordance with the
Satisfactory Planning Permission;
6.2.2 fails to complete the Venue Development within the Handover
Period, such period to be extended in respect of force majeure
events outside the control of the Developer and/or justifiable
delays as allowed by the architect under the building contract to
be entered by the Developer, provided that in either case the
Developer seeks to complete or procure completion of the
Development as soon as possible; or
6.2.3 becomes insolvent within the meaning of the Insolvency Act 1986
or equivalent legislation in the relevant jurisdiction and in
which case the Purchaser shall be deemed to have enforced the
Security and to have stepped in to complete the Venue Development
immediately prior to the Developer becoming or being declared
insolvent.
7. Subject to the Vendors procuring any necessary consents from the parties
to the Joint Venture Agreement (other than any party to that agreement
that is at the relevant time a member of the Group) the Purchaser shall
(so far as it is able by the exercise of control over the voting rights
held by any member of the Group in respect of the capital of PEC) and
subject to the Vendors and/or the Developer giving to the Purchaser and
PEC a full and sufficient indemnity in respect thereof, procure that PEC
shall enter into such deeds and documents as are necessary to obtain the
Satisfactory Planning Permission including any Planning Agreement(s).
8. Where the Estimated Management Fee payable under paragraph 4 is to be
satisfied by the Vendors, it shall be satisfied in the same proportions
as their holdings of Sale Shares as set out in Schedule 1 in cash.
9. The Vendors will liase with the Purchaser and keep it informed of the
proposals for the Development and will supply to the Purchaser copies of
all planning applications for the Development and will keep the
Purchaser informed as to the progress of such applications provided
always the Vendors agree that neither they nor the Developer shall apply
for a planning permission or seek to develop the Development Land in a
manner which may materially and adversely affect the use, repair and
replacement of the Venue (including without limitation, any governmental
approvals benefiting the Venue) or which would prohibit the Developer
giving and complying with the provisions and covenants set out in
paragraph 5.
98
<PAGE>
10. The Purchaser undertakes to the Vendors that following Completion and
until the earlier of the fifth (5th) anniversary of the Completion Date
or the date of delivery of the Point Consideration Loan Notes save as
provided for and/or contemplated by the terms of this Agreement or with
the prior written consent of the Vendors such consent not to be
unreasonably withheld or delayed or as required by law or under the
terms of the Joint Venture Agreement:
10.1 it will not agree to allow PEC to transfer its interest in the
Development Land to a third party or otherwise agree or allow PEC to
dispose of its interest in the Development Land (other than to SFX or
any of its subsidiary undertakings, in which case SFX or its subsidiary
undertaking will agree to be bound by this covenant and will be a
successor to the obligations of PEC hereunder);
10.2 it will not create or grant any easements or allow any restrictive
covenants or encumbrances (including without limitation any charges) to
be created over the Development Land;
10.3 it will not apply for planning permission to change the current use of
the Venue nor object to the application for planning permission in
relation to the Point Village Development, subject to such planning
permission complying with the provisions of this Schedule 8;
10.4 it will not deliberately and knowingly do any act or thing (and shall
procure that the Company, PEC (so far as it is able within the terms of
the Joint Venture Agreement and the articles of association of PEC) and
the members of the Group will not do any act or thing) the effect of
which is to reduce the amount of the Point Consideration provided always
that nothing contained in this paragraph 10.4 shall prohibit or restrict
the Purchaser in growing or exploiting the Business;
10.5 in so far as it is able within the terms of the Joint Venture Agreement
and the articles of association of PEC it will procure that Paul Gregg
and David Rogers are appointed as directors of PEC with Paul Gregg being
appointed chairman of the board of PEC provided that they are permitted
to act as such by law and except where the relevant member of the
Purchaser's Group or the Group has dismissed or is entitled to dismiss
him summarily from his employment. If both Paul Gregg and David Rogers
cease to be employed by the Purchaser's Group or the Group (as the case
may be) one of them shall remain or be appointed as a director of PEC;
10.6 it will retain PEC as a separate operating entity;
10.7 it will not pass any resolution for the winding-up, dissolution or
reconstruction of PEC;
10.8 it will not take steps designed to prevent PEC from carrying on its
business in the ordinary course, substantially as presently carried on;
10.9 it will not for a period of two years from the Completion Date sell or
otherwise dispose of all or any of the shares it owns indirectly in PEC.
After the expiry of the aforementioned two year period it may only
transfer such shares: (i) if the transferee enters into a deed of
novation with the Vendors and the Purchaser agreeing to assume
99
<PAGE>
the Purchaser's rights and obligations under this Schedule as if the
transferee were a party to this Agreement for the purposes of this
Schedule only; and (ii) PEC has granted to the Vendors a second charge
over the Development Land subordinated only to such charge as is in
place at Completion and only to the extent of the indebtedness secured
by such charge at Completion;
10.10 subject to the provisions of paragraph 10.11, it will not change or vary
the terms of the Joint Venture Agreement;
10.11 it will co-operate with the Vendors, upon their reasonable request to
vary the terms of the Joint Venture Agreement and, in particular, in
order to facilitate the payment to Mr Crosbie of his proportion of the
profits of PEC provided that the relevant member of the Group shall not
be financially disadvantaged;
10.12 it will procure that PEC shall open a separate bank account (to be known
as the Development Account) which will be used solely for the purposes
of receiving the proceeds of sale of the Development Land under the
Contract and making the payments (to the extent that they fall to be
paid by PEC) identified in paragraphs (i) to (vi) of the definition of
"Point Consideration";
10.13 it will procure that Paul Gregg and David Rogers together with any
nominees of Mr Crosbie shall be the only signatories on the bank mandate
which operates the Development Account.
11. For the purposes of paragraphs 11 to 13, in the circumstances where the
Developer is required to pay the Estimated Management Fee and the
Management Fee under the Contract, "Vendors" shall mean the "Vendors for
and on behalf of the Developer". Within 60 days of the Open Date the
Purchaser shall deliver to the Vendors a draft statement of the
Management Fee, such statement setting out the Purchaser's bases of
calculation. The Vendors shall within 30 days of receipt of the draft
statement of Management Fee, review the same and deliver written notice
to the Purchaser stating either that they agree with the draft statement
of Management Fee, or that they disagree, and, if so, in what respect
they disagree and stating their reasons for their disagreement and their
calculation of the Management Fee.
12. If the Purchaser disagrees with the Vendors' notice of disagreement and
if the Purchaser and the Vendors cannot reach agreement within 30 days
of the date of the Vendors' notification of disagreement, the matter
shall be referred to an independent firm of chartered accountants and
the provisions of paragraph 6.5 of the Agreement shall apply mutatis
mutandis. On the decision of the firm of chartered accountants being
published, the amount of the Management Fee shall be finalised and paid
as provided in paragraph 14. The firm of chartered accountants will as
part of their decision determine in what proportion their costs should
be borne by the Vendors and the Purchaser.
13. If the Vendors serve notice stating that they agree pursuant to
paragraph 11 or the parties reach agreement pursuant to paragraph 12,
the amount so agreed will be the Management Fee for all purposes of this
Agreement.
100
<PAGE>
14. Within 7 days of the agreement or determination of the amount of the
Management Fee in accordance with paragraphs 11 and 12:
14.1 if the amount of the Management Fee exceeds the Estimated Management
Fee, the Vendors will pay an amount equal to such excess to the
Purchaser save where the Developer is required to pay the same to PEC
under the Contract;
14.2 if the amount of the Management Fee is less than the Estimated
Management Fee, the Purchaser will pay an amount equal to such shortfall
to the Vendors save where the Developer paid the Estimated Consideration
to PEC pursuant to the terms of the Contract and in which case SFX shall
procure (so far as it is able within the terms of the Joint Venture
Agreement and the articles of association of PEC by the exercise of
control over the voting rights held by any member of the Group in
respect of the capital of PEC) that PEC shall pay such shortfall to the
Developer;
14.3 any amounts payable:
14.3.1 by the Purchaser under paragraph 14.2 shall be satisfied in cash
in the same proportions as set out in column 4 of Schedule 1;
14.3.2 by the Vendors under paragraph 14.1 shall be satisfied in the
same proportions as set out in column 4 of Schedule 1 by the
cancellation of Point Consideration Loan Notes in a principal
amount equal to the amount so payable or, to the extent that the
Vendors no longer hold Point Consideration Loan Notes, in cash,
provided that, if any of the Vendors so elects, any amounts
payable by such person(s) under paragraph 14.1 shall be satisfied
by payment in cash; and
14.3.3 by the Developer under paragraphs 4 and 14.1 shall be satisfied by
payment in cash.
15. 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 each member of 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 the Venue
Development, the Handover Period, any failure to pay the Management Fee
and any subsequent loss suffered in relation to the Venue Development,
provided that the Vendors' liability under this paragraph 15 shall not
exceed(pound)10,250,000. Where an amount is due under this paragraph 15
(and for these purposes due shall mean either agreed by the Purchaser
and the Vendors to be payable or finally determined, as that phrase is
defined in clause 9.5 of the Agreement) it shall be satisfied in the
same proportion as set out in column 4 of Schedule 1 by the cancellation
of the Point Consideration Loan Notes in a principal amount equal to the
101
<PAGE>
amount due hereunder or, to the extent that the Vendors no longer hold
such notes, in cash.
102
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this document as a deed on
the date appearing at the head hereof.
EXECUTED by ) /s/ Howard J Tytel
duly authorised officer on behalf of ) --------------------------------
SFX ENTERTAINMENT, INC. ) By : Howard J Tytel
Title: Executive Vice President
Member of the Office of
the Chairman, General
Counsel and Secretary
EXECUTED AS A DEED by ) /s/
two directors or a director and ) --------------------------------
the company secretary of ) Director
SFX U.K. HOLDINGS LIMITED ) /s/
--------------------------------
Director/ Company secretary
SIGNED, SEALED ) /s/
AND DELIVERED by )
PAUL RICHARD GREGG )
in the presence of )
)
SIGNED, SEALED ) /s/
AND DELIVERED by )
ANITA KIM GREGG )
in the presence of )
)
103
<PAGE>
SIGNED, SEALED ) /s/
AND DELIVERED by )
DAVID CHARLES ROGERS )
in the presence of )
)
SIGNED, SEALED ) /s/
AND DELIVERED by )
JULIE DIANE ROGERS )
in the presence of )
)
SIGNED, SEALED ) /s/
AND DELIVERED by )
SAMUEL JOHN SHROUDER )
in the presence of )
)
SIGNED, SEALED ) /s/
AND DELIVERED by )
DAVID CLIFFORD GREGG )
in the presence of )
)
SIGNED, SEALED ) /s/
AND DELIVERED by )
SIMON PAUL GREGG )
in the presence of )
)
104
<PAGE>
EXECUTED AS A DEED ) /s/
by DAVID CHARLES ROGERS )
AS TRUSTEE OF THE DAVID )
CHARLES ROGERS INTEREST IN )
POSSESSION SETTLEMENT )
in the presence of )
EXECUTED AS A DEED ) /s/
by JULIE DIANE ROGERS )
AS TRUSTEE OF THE DAVID )
CHARLES ROGERS INTEREST IN )
POSSESSION SETTLEMENT )
in the presence of )
EXECUTED AS A DEED ) /s/
by JOHN MICHAEL COOK )
AS TRUSTEE OF THE DAVID )
CHARLES ROGERS INTEREST )
IN POSSESSION SETTLEMENT )
in the presence of )
EXECUTED AS A DEED ) /s/
by SAMUEL JOHN SHROUDER )
AS TRUSTEE OF THE SAMUEL )
JOHN SHROUDER INTEREST IN )
POSSESSION TRUST )
in the presence of )
105
<PAGE>
EXECUTED AS A DEED ) /s/
by FRIEDA SHROUDER )
AS TRUSTEE OF THE SAMUEL )
JOHN SHROUDER INTEREST IN )
POSSESSION TRUST )
in the presence of )
EXECUTED AS A DEED ) /s/
by DAVID CLIFFORD GREGG )
AS TRUSTEE OF THE DAVID )
CLIFFORD GREGG ACCUMULATION )
AND MAINTENANCE TRUST )
in the presence of )
EXECUTED AS A DEED ) /s/
by SUZANNE GREGG )
AS TRUSTEE OF THE DAVID )
CLIFFORD GREGG ACCUMULATION )
AND MAINTENANCE TRUST )
in the presence of )
EXECUTED AS A DEED ) /s/
by SIMON PAUL GREGG )
AS TRUSTEE OF THE DAVID )
CLIFFORD GREGG ACCUMULATION )
AND MAINTENANCE TRUST )
in the presence of )
106
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our joint report dated July 27, 1999 with respect to
the financial statements of Apollo Leisure Group plc as of November 28, 1998 and
for each of the two years then ended included in this Form 8-K of SFX
Entertainment, Inc., and to the incorporation by reference in the Registration
Statement No 333-76123 and related Prospectus on Form S-3 filed by SFX
Entertainment, Inc. in April 1999 with respect to the registration of 2,736,448
Class A Common Stock and in the Registration Statement No 333-58737 on Form S-8
filed by SFX Entertainment, Inc. in July 1999 with respect to its 1998 Stock
Option and Restricted Stock Plan.
We also consent to the reference to our firm as experts in accounting and
auditing.
/s/ Deloitte & Touche
Deloitte & Touche
Chartered Accountants
Bracknell, England
September 17, 1999
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our joint report dated July 27, 1999 with respect to
the financial statements of Apollo Leisure Group plc as of November 28, 1998 and
for each of the two years then ended included in this Form 8-K of SFX
Entertainment, Inc., and to the incorporation by reference in the Registration
Statement No 333-76123 and related Prospectus on Form S-3 filed by SFX
Entertainment, Inc. in April 1999 with respect to the registration of 2,736,448
Class A Common Stock and in the Registration Statement No 333-58737 on Form S-8
filed by SFX Entertainment, Inc. in July 1999 with respect to its 1998 Stock
Option and Restricted Stock Plan.
We also consent to the reference to our firm as experts in accounting and
auditing.
/s/ Smith Partnership
Smith Partnership
Chartered Accountants
Manchester, England
September 17, 1999
<PAGE>
APOLLO LEISURE GROUP PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED GROUP BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS AT AS AT
15 MAY 1999 28 NOVEMBER 1998
----------------------- ----------------------
(UNAUDITED)
(pounds sterling)000 (pounds sterling)000
<S> <C> <C>
Fixed assets
Tangible assets ................................................ 79,150 78,270
Investments .................................................... 2,116 1,817
------ ------
81,266 80,087
------ ------
Current assets
Stocks ......................................................... 640 670
Debtors ........................................................ 10,994 12,125
Investments .................................................... 1,076 908
Cash at bank and in hand ....................................... 10,462 15,285
------ ------
23,172 28,988
Creditors: amounts falling due within one year .................. (48,809) (52,078)
Net current liabilities ......................................... (25,637) (23,090)
Total assets less current liabilities ........................... 55,629 56,997
Creditors: amounts falling due after more than one year ......... (23,752) (25,943)
Provisions for liabilities and charges
Deferred taxation .............................................. (2,227) (2,249)
Grants received ................................................ (1,506) (1,123)
------- -------
Net assets ...................................................... 28,144 27,682
======= =======
Shareholders' funds
Share capital .................................................. 3,000 3,000
Other reserves ................................................. 10,051 10,264
Revenue reserves ............................................... 13,162 12,928
------- -------
Equity shareholders' funds ...................................... 26,213 26,192
Minority interests .............................................. 1,931 1,490
------- -------
28,144 27,682
======= =======
</TABLE>
The condensed consolidated group balance sheet at 28 November, 1998 has been
derived from the audited financial statements at that date but does not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
APOLLO LEISURE GROUP PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED GROUP PROFIT AND LOSS ACCOUNT
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
24 WEEKS ENDED
-------------------------------------------------
15 MAY 1999 16 MAY 1998
----------------------- -----------------------
(pounds sterling)000 (pounds sterling)000
<S> <C> <C>
Turnover ........................................ 36,583 36,758
Cost of sales ................................... 15,001 17,994
------ ------
Gross profit .................................... 21,582 18,764
Administration expenses ......................... 18,428 17,170
------ ------
3,154 1,594
Other operating income .......................... 619 630
------ ------
Operating profit ................................ 3,773 2,224
Interest receivable ............................. 86 26
Interest payable ................................ 1,017 1,058
------ ------
Profit before taxation .......................... 2,842 1,192
Taxation ........................................ 1,171 556
------ ------
Profit after taxation ........................... 1,671 636
Minority interests .............................. 441 12
------ ------
Profit for period ............................... 1,230 624
Dividends paid .................................. 1,000 1,000
------ ------
Retained profit / (loss) for the period ......... 230 (376)
====== ======
Earnings per share .............................. (pounds sterling)0.41 (pounds sterling)0.21
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
APOLLO LEISURE GROUP PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED GROUP CASHFLOW STATEMENT
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
24 WEEKS ENDED
------------------------------------------------
15 MAY 1999 16 MAY 1998
----------------------- ----------------------
(pounds sterling)000 (pounds sterling)000
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES ............................... 2,462 (2,996)
Returns on investments and servicing of finance ................... (931) (1,033)
Taxation .......................................................... (107) (222)
Capital expenditure and financial investment ...................... (3,678) (1,906)
Acquisitions ...................................................... -- --
Equity dividends paid ............................................. (1,000) (1,000)
NET CASHFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING ......... (3,254) (7,157)
Management of liquid resources .................................... 8,681 10,053
Financing:
Loans and finance leases .......................................... (902) (414)
Grants received ................................................... 413 --
Net cashflow from financing ....................................... (489) (414)
------ ------
INCREASE IN CASH .................................................. 4,939 2,482
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
APOLLO LEISURE GROUP PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15 MAY 1999
(UNAUDITED)
NOTE 1 -- ORGANISATION AND DESCRIPTION OF BUSINESS
The Apollo Leisure Group ("Group") originated in 1977 with the purchase of
the "New Theatre" in Oxford. The Group has expanded significantly since that
time through a combination of organic growth and a series of corporate
acquisitions. The Group currently owns or manages an estate of 22 theatres, 3
arenas, 16 cinemas, 6 licensed premises and 4 bingo halls in the United Kingdom
and Eire.
In 1997 the Group entered into a new business area, with the purchase of
City Centre Leisure ("CCL"), a group involved in running sports and fitness
leisure facilities on behalf of local authorities in the United Kingdom. The
Group currently owns 67.5% of the ordinary share capital of CCL and is
contracted to acquire the remaining 37.5% in three annual installments of 12.5%
under the terms of an earnout agreement.
NOTE 2 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for an interim period
are not necessarily indicative of the results that may be expected for a full
year. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Apollo Leisure Group PLC Annual Report
for the year ended November 28, 1998.
The accompanying unaudited condensed consolidated financial statements
include the accounts and transactions of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated.
The Company's revenues vary throughout the year. The Company's first 24
weeks generally produces the lowest revenues for the year and the last 28 weeks
generally produces the highest revenues for the year.
NOTE 3 -- INDEBTEDNESS
The Apollo Group use debt finance, in the form of term loans, to finance
specific capital development projects. The terms of these loans include a
number of covenant tests and as at 28 November 1998 the Apollo Group was in
breach of the interest cover covenant on a loan within one of its subsidiary
companies. Whilst this is an isolated breach, the default causes further
technical breaches in relation to other loans within the Apollo Group.
Management does not believe that there is a possibility of the banks
requiring repayment of all Group loans and accordingly have not reclassified
the term loans to creditors: amount falling due within one year. Management has
formed this view on the basis of the strong cash flows generated by the Group
and the quality of the asset backing available as security to these lenders.
This accounting treatment is permitted in the UK under the `true and fair
override' provisions included within section 226(5) of the Companies Act of
1985.
NOTE 4 -- EARNINGS PER SHARE
Earnings per share is based upon the net profit applicable to basic common
shares. There is only one class of share and consequently no dilution
calculations are required.
4
<PAGE>
APOLLO LEISURE GROUP PLC.
DIRECTORS' REPORT
FOR THE YEAR ENDED 28TH NOVEMBER 1998
The directors present their report together with the audited group
financial statements for the year ended 28th November 1998.
PRINCIPAL ACTIVITIES
The principal activities of the group are Theatre Services, Theatrical
Show Production, Sports and Fitness Centre Management and the operation of
Bingo and Social Clubs, Cinemas, Hotels and other licensed outlets.
REVIEW OF BUSINESS & FUTURE DEVELOPMENTS
The results for the year are set out in the Group profit and loss account
on page 9 together with the attached notes.
The profit of the Group's theatre activities was affected mainly by the
establishment of the Lyceum following its reopening in 1996. The Group has now
secured the prestigious Lion King contract, to run at the Lyceum from September
1999 and anticipate a mature profit year in 2000.
An Arts Council Lottery Grant awarded in 1997 enabled the full
refurbishment and redevelopment of the Liverpool Empire Theatre to proceed at a
cost of (pounds sterling)11m. The theatre reopened in October 1998 with an
extended season of Les Miserables, and Phantom of the Opera.
In early 1998 the Group was awarded the management contract of the
Sheffield Arena, supplementing its multi-purpose arenas in Cardiff and Dublin
and also adding sports in the form of ice hockey and basketball to its range of
activities.
As reported last year, the Group extended its local authority involvement
with the acquisition of a majority holding in CCL Leisure Limited (formerly
City Centre Leisure (Holdings) Limited), which is a local authority sports and
fitness contractor. During the past twelve months CCL Leisure Limited has been
awarded further contracts for the management of leisure centres and also
enjoyed extensions to some of its existing contracts and invested considerable
capital into public facilities.
In November 1998 the Group entered into a unique agreement in Torbay to
redevelop a theatre (already operated by the Group) into a new 9-screen
multiplex, to extend the management agreement on a second theatre, and to
manage and invest in a leisure centre on behalf of the Council, through its
subsidiary CCL Leisure Limited.
Two new 6-screen multiplexes were opened, one at a new "Hollywood Park"
development in Port Talbot, and a further "Hollywood Park" at Barrow, which
opened in March 1999.
The Group continues to search for and develop 5 to 9-screen multiplexes in
secondary towns, often in partnership with local authorities, and are committed
to extending the "Hollywood Park" brand to further sites.
The directors are satisfied with the results for the year and anticipate
continued growth in its various divisions.
DIVIDENDS
Interim dividends of (pounds sterling)0.67 (1997 -- (pounds
sterling)0.49) per share were paid during the year (total dividend paid
(pounds sterling)2,000,000 1997 -- (pounds sterling)800,000).
The directors recommend that no final dividend be declared (1997 --
(pounds sterling)Nil).
5
<PAGE>
APOLLO LEISURE GROUP PLC.
DIRECTORS' REPORT
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
DIRECTORS
The directors who served during the year and their interests (including
family interests) in the issued share capital of the company were:
<TABLE>
<CAPTION>
28TH NOVEMBER 1998 30TH NOVEMBER 1997
(pounds sterling)1 ORDINARY SHARES NO. NO.
- ---------------------------------------------------- -------------------- -------------------
<S> <C> <C>
P.R. Gregg ...................................... 696,480 696,480
A.K. Gregg ...................................... 1,317,840 1,317,840
J.F. Jarvis (appointed 11th March 1998) ......... -- --
D.C. Rogers, F.C.A. ............................. 321,420 321,420
S.J. Shrouder ................................... 214,260 214,260
D.C. Gregg ...................................... 225,000 270,000
</TABLE>
DISABLED EMPLOYEES
Applications for employment by disabled persons are always fully
considered, bearing in mind the aptitudes of the applicant concerned. In the
event of members of staff becoming disabled, every effort is made to ensure
that their employment with the group continues and the appropriate training is
arranged. It is the policy of the group that the training, career development
and promotion of disabled persons should, as far as possible, be identical with
that of other employees.
EMPLOYEE CONSULTATION
The group places considerable value on the involvement of its employees
and continues its practice of keeping them informed on matters affecting them
as employees and on the various factors affecting the performance of the group.
This is achieved through regular formal and informal meetings.
CHARITABLE CONTRIBUTIONS
The group contributed (pounds sterling)25,286 to charities during the
year.
POLICY FOR PAYMENT OF CREDITORS
Whenever possible the group agrees terms of payment with individual
suppliers at the point of first placing orders with the supplier. Significant
amendments to established terms are discussed with suppliers before the
amendments take place. The group always endeavours to abide by agreed terms.
The amount for trade creditors shown at the balance sheet as at the end of
the financial year represents 90 days (1997 -- 58 days) of average daily
purchases for the group.
YEAR 2000
The directors are aware of the business problems associated with the Year
2000 and are taking steps to identify all compliance pitfalls and to mitigate
their impact on the group's future operations by 31st December 1999.
The cost of achieving Year 2000 compliance will be written off directly to
the profit and loss accounts, to the extent that the expenditure does not
represent an improvement to existing assets, and this amount is not expected to
be significant.
6
<PAGE>
APOLLO LEISURE GROUP PLC.
DIRECTORS' REPORT
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare financial statements for
each financial year which give a true and fair view of the state of the affairs
of the company and group and of the profit or loss of the group for that year.
In preparing those financial statements, the directors are required to:
Select suitable accounting policies and then apply them consistently;
Make judgements and estimates that are reasonable and prudent;
State whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
Prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the group will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets
of the group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
AUDITORS
Smith Partnership and Deloitte & Touche have indicated that they are
willing to continue in office as joint auditors and a resolution proposing
their re-appointment will be submitted at the forthcoming Annual General
Meeting.
This report was approved by the board on 27th July 1999 and signed on its
behalf.
/s/ D.C. Rogers F.C.A.
D.C. Rogers F.C.A.,
Secretary.
7
<PAGE>
AUDITOR'S REPORT TO THE SHAREHOLDERS OF
APOLLO LEISURE GROUP PLC.
We have audited the financial statements on pages 9 to 31 which have
been prepared under the historical cost convention (as modified by the
revaluation of certain fixed assets) and the accounting policies as set out on
pages 14 to 16.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 7, the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those financial statements and to
report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements.
It also includes an assessment of the significant estimates and judgements made
by the directors in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the company's and the group's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the
state of the affairs of the company and the group as at 28th November 1998 and
of the group's profit for the year then ended and have been properly prepared
in accordance with the Companies Act 1985.
/s/ Smith Partnership /s/ Deloitte & Touche
SMITH PARTNERSHIP DELOITTE & TOUCHE
CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS
& REGISTERED AUDITORS & REGISTERED AUDITORS
3 Ralli Courts, Columbia Centre,
West Riverside, Market Street, Bracknell,
Manchester, M3 5FT. Berkshire, RG12 1PA.
Date: 27th July 1999 Date: 27th July 1999
8
<PAGE>
APOLLO LEISURE GROUP PLC.
GROUP PROFIT AND LOSS ACCOUNTS
FOR THE YEARS ENDED 28TH NOVEMBER 1998 AND 29TH NOVEMBER 1997
<TABLE>
<CAPTION>
1998 1997
NOTES (pounds sterling) (pounds sterling)
------------- -------------------- -------------------
<S> <C> <C> <C>
Turnover ................................................ 2 79,342,933 95,038,447
Cost of sales ........................................... 46,059,026 60,237,589
---------- ----------
GROSS PROFIT ............................................ 33,283,907 34,800,858
Administrative expenses ................................. 29,206,604 28,957,865
---------- ----------
4,077,303 5,842,993
Other operating income .................................. 3 926,352 800,032
---------- ----------
GROUP OPERATING PROFIT .................................. 4 5,003,655 6,643,025
Group Share of profit of associated undertaking ......... 12(ii) 742,282 432,018
Profit/(loss) on sale of properties ..................... 482,846 (60,351)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST ........... 6,228,783 7,014,692
Interest receivable ..................................... 288,607 454,958
Interest payable and similar charges .................... 7 (2,368,426) (2,337,742)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION ........... 2 4,148,964 5,131,908
Tax on profit on ordinary activities .................... 8 (1,936,105) (2,340,770)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION ............ 2,212,859 2,791,138
Equity minority interests ............................... (248,410) (340,528)
---------- ----------
PROFIT FOR THE FINANCIAL YEAR ........................... 1,964,449 2,450,610
Dividends paid .......................................... 9 (2,000,000) (800,000)
---------- ----------
RETAINED (LOSS)/PROFIT FOR THE FINANCIAL YEAR ........... 22 (35,551) 1,650,610
========== ==========
</TABLE>
The notes on pages 14 to 31 form part of these financial statements
9
<PAGE>
APOLLO LEISURE GROUP PLC.
GROUP STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEARS ENDED 28TH NOVEMBER 1998 AND 29TH NOVEMBER 1997
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- ---------------------
<S> <C> <C>
Profit for the financial year ................................................ 1,964,449 2,450,610
Deficit on revaluation in the year ........................................... (31,419) --
Currency translation differences on foreign currency net investments ......... 13,354 (217,091)
--------- ---------
TOTAL GAINS & LOSSES RECOGNISED SINCE LAST ANNUAL REPORT ..................... 1,964,384 2,233,519
========= =========
NOTE OF HISTORICAL COST PROFITS FOR THE YEAR ENDED 28TH NOVEMBER 1998
1998 1997
(pounds sterling) (pounds sterling)
------------------ -------------------
Reported profit on ordinary activities before taxation ....................... 4,148,964 5,131,908
Difference between historical cost profit on disposal of freehold property
and the loss on disposal calculated on the revalued amount .................. -- 584,046
Difference between historical cost depreciation charge and the actual
depreciation charge of the year calculated on the revalued amount ........... 219,436 230,914
---------- ----------
HISTORICAL COST PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION ................ 4,368,400 5,946,868
========== ==========
HISTORICAL COST PROFIT FOR THE YEAR RETAINED AFTER TAXATION, MINORITY
INTERESTS AND DIVIDENDS ..................................................... 183,885 2,465,570
========== ==========
</TABLE>
The notes on pages 14 to 31 form part of these financial statements
10
<PAGE>
APOLLO LEISURE GROUP PLC.
GROUP BALANCE SHEETS AS AT 28TH NOVEMBER 1998 AND 29TH NOVEMBER 1997
<TABLE>
<CAPTION>
1998
-----------------------------------------
NOTES (pounds sterling) (pounds sterling)
------- -------------------- --------------------
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets .................................... 11 78,269,924
Investments ........................................ 12 1,816,912
80,086,836
CURRENT ASSETS
Stocks ............................................. 13 669,853
Debtors ............................................ 14 12,125,510
Investments ........................................ 15 907,631
Cash at bank & in hand ............................. 15,285,346
----------
28,988,340
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR ..... 16 52,078,471
----------
NET CURRENT LIABILITIES ............................ (23,090,131)
TOTAL ASSETS LESS CURRENT LIABILITIES .............. 56,996,705
-----------
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN
ONE YEAR .......................................... 17 25,942,693
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation .................................. 19 2,249,371
Grants received .................................... 20 1,122,895
-----------
NET ASSETS ......................................... 2 27,681,746
===========
CAPITAL AND RESERVES
Called up share capital ............................ 21 3,000,000
Revaluation reserve ................................ 23 8,592,671
Other reserves ..................................... 23 1,671,445
Profit & loss account .............................. 23 12,928,021
-----------
EQUITY SHAREHOLDERS' FUNDS ......................... 22 26,192,137
MINORITY INTERESTS -- EQUITY ....................... 161,020
- -- NON-EQUITY ...................................... 24 1,328,589
-----------
27,681,746
===========
<CAPTION>
1997
----------------------------------------
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
FIXED ASSETS
Tangible assets .................................... 75,196,006
Investments ........................................ 1,522,293
76,718,299
CURRENT ASSETS
Stocks ............................................. 685,632
Debtors ............................................ 8,748,367
Investments ........................................ 1,292,851
Cash at bank & in hand ............................. 13,142,355
----------
23,869,205
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR ..... 42,729,915
----------
NET CURRENT LIABILITIES ............................ (18,860,710)
TOTAL ASSETS LESS CURRENT LIABILITIES .............. 57,857,589
-----------
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN
ONE YEAR .......................................... 26,591,821
PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation .................................. 1,728,103
Grants received .................................... 1,427,932
-----------
NET ASSETS ......................................... 28,109,733
===========
CAPITAL AND RESERVES
Called up share capital ............................ 3,000,000
Revaluation reserve ................................ 8,839,957
Other reserves ..................................... 1,747,026
Profit & loss account .............................. 12,879,767
-----------
EQUITY SHAREHOLDERS' FUNDS ......................... 26,466,750
MINORITY INTERESTS -- EQUITY ....................... 37,240
- -- NON-EQUITY ...................................... 1,605,743
-----------
28,109,733
===========
</TABLE>
These financial statements were approved by the board on 27th July 1999.
/s/ P.R. Gregg /s/ D.C. Rogers F.C.A.
- -------------- ----------------------
P.R. Gregg D.C. Rogers F.C.A.
Director Director
The notes on pages 14 to 31 form part of these financial statements
11
<PAGE>
APOLLO LEISURE GROUP PLC.
COMPANY BALANCE SHEETS AS AT 28TH NOVEMBER 1998 AND 29TH NOVEMBER 1997
<TABLE>
<CAPTION>
1998
-----------------------------------------
NOTES (pounds sterling) (pounds sterling)
------- -------------------- --------------------
<S> <C> <C> <C>
FIXED ASSETS
Investments ................................... 12 28,029,809
CURRENT ASSETS
Debtors ....................................... 14 1,000
Cash at bank & in hand ........................ 73
-----
1,073
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR. 16 1,598,051
---------
NET CURRENT LIABILITIES ....................... (1,596,978)
----------
TOTAL ASSETS LESS CURRENT LIABILITIES ......... 26,432,831
==========
CAPITAL AND RESERVES
Called up share capital ....................... 21 3,000,000
Revaluation reserve ........................... 23 23,340,005
Profit & loss account ......................... 23 92,826
----------
EQUITY SHAREHOLDERS' FUNDS .................... 26,432,831
==========
<CAPTION>
1997
----------------------------------------
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
FIXED ASSETS
Investments ................................... 28,981,415
CURRENT ASSETS
Debtors ....................................... 1,000
Cash at bank & in hand ........................ 73
-----
1,073
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR. 2,000,051
---------
NET CURRENT LIABILITIES ....................... (1,998,978)
----------
TOTAL ASSETS LESS CURRENT LIABILITIES ......... 26,982,437
==========
CAPITAL AND RESERVES
Called up share capital ....................... 3,000,000
Revaluation reserve ........................... 23,951,040
Profit & loss account ......................... 31,397
----------
EQUITY SHAREHOLDERS' FUNDS .................... 26,982,437
==========
</TABLE>
These financial statements were approved by the board on 27th July 1999.
/s/ P.R. Gregg /s/ D.C. Rogers F.C.A.
- -------------- ----------------------
P.R. Gregg D.C. Rogers F.C.A.
Director Director
The notes on pages 14 to 31 form part of these financial statements
12
<PAGE>
APOLLO LEISURE GROUP PLC.
GROUP CASH FLOW STATEMENTS
FOR THE YEARS ENDED 28TH NOVEMBER 1998 AND 29TH NOVEMBER 1997
<TABLE>
<CAPTION>
1998
-----------------------------------------
NOTES (pounds sterling) (pounds sterling)
------- -------------------- --------------------
<S> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES .......... 25 14,642,249
RETURNS ON INVESTMENTS & SERVICING OF FINANCE 26 (1,918,414)
TAXATION ........................................... (1,664,312)
CAPITAL EXPENDITURE & FINANCIAL INVESTMENT ......... 26 (6,776,992)
ACQUISITIONS ....................................... 26 (421,155)
EQUITY DIVIDENDS PAID .............................. (2,000,000)
-----------
NET CASH INFLOW BEFORE USE OF LIQUID RESOURCES
& FINANCING ....................................... 1,861,376
MANAGEMENT OF LIQUID RESOURCES ..................... 27 1,423,542
FINANCING
Loans and finance leases ........................... 28 (110,773)
Grants received .................................... 255,635
--------
NET CASH INFLOW FROM FINANCING ..................... 144,862
-----------
INCREASE/DECREASE IN CASH .......................... 29 3,429,780
===========
1998
(pounds sterling)
------------------
RECONCILIATION OF NET CASH FLOW
MOVEMENT TO MOVEMENT IN NET DEBT
Increase/Decrease in cash in the year .............. 3,429,780
Cash inflow/outflow from movement in debt and
lease financing ................................... 110,773
Cash inflow from management of liquid
resources ......................................... (1,423,542)
-------------
Decrease/Increase in net debt resulting from
cash flows ........................................ 2,117,011
Increase in net debt resulting from the
Acquisition of subsidiary undertakings ............ --
Movements in unlisted investments .................. 59,533
New finance leases ................................. (250,000)
Exchange difference ................................ (39,803)
-------------
Movement in net debt for the year .................. 1,886,741
Net debt at beginning of the year .................. (15,488,944)
-------------
Net debt at the end of the year .................... 30 (13,602,203)
=============
<CAPTION>
1997
------------------------------------------
(pounds sterling) (pounds sterling)
-------------------- ---------------------
<S> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES .......... 7,208,880
RETURNS ON INVESTMENTS & SERVICING OF FINANCE (1,950,105)
TAXATION ........................................... (1,606,285)
CAPITAL EXPENDITURE & FINANCIAL INVESTMENT ......... (8,399,303)
ACQUISITIONS ....................................... (178,645)
EQUITY DIVIDENDS PAID .............................. (800,000)
------------
NET CASH INFLOW BEFORE USE OF LIQUID RESOURCES
& FINANCING ....................................... 5,725,458
MANAGEMENT OF LIQUID RESOURCES ..................... 2,877,436
FINANCING
Loans and finance leases ........................... 1,815,352
Grants received .................................... 367,025
---------
NET CASH INFLOW FROM FINANCING ..................... 2,182,377
------------
INCREASE/DECREASE IN CASH .......................... (665,645)
============
1997
(pounds sterling)
-------------------
RECONCILIATION OF NET CASH FLOW
MOVEMENT TO MOVEMENT IN NET DEBT
Increase/Decrease in cash in the year .............. (665,645)
Cash inflow/outflow from movement in debt and
lease financing ................................... (1,815,352)
Cash inflow from management of liquid
resources ......................................... (2,877,436)
--------------
Decrease/Increase in net debt resulting from
cash flows ........................................ (5,358,433)
Increase in net debt resulting from the
Acquisition of subsidiary undertakings ............ (8,016)
Movements in unlisted investments .................. 92,147
New finance leases ................................. (240,504)
Exchange difference ................................ 93,785
--------------
Movement in net debt for the year .................. (5,421,021)
Net debt at beginning of the year .................. (10,067,923)
--------------
Net debt at the end of the year .................... (15,488,944)
==============
</TABLE>
The notes on pages 14 to 31 from part of these financial statements
13
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998
1. ACCOUNTING POLICIES
Accounting Convention
The financial statements have been prepared under the historical cost
convention modified to include the revaluation of freehold and long leasehold
land and buildings and investments in subsidiary and associated companies. The
financial statements have been prepared in accordance with applicable
accounting standards.
Basis of Preparation
The group financial statements consolidate those of the company and all
its subsidiaries made up to 28th November 1998.
The financial statements are prepared for the 52 or 53 week period
("year") ending on the Saturday nearest to 30th November.
Goodwill
Goodwill arising on consolidation and purchased goodwill is written off to
reserves.
Tangible Fixed Assets
Depreciation is calculated to write off the cost or valuation less the
estimated realisable value of tangible fixed assets over their estimated useful
lives. The rates are calculated on a straight line basis as follows:
<TABLE>
<S> <C>
Freehold and long leasehold property ......... mainly over 50 years
Short leasehold property ..................... over the term of the lease
Fixtures and fittings ........................ 3 to 10 years
Computer equipment ........................... 3 to 5 years
Motor vehicles ............................... 3 to 7 years
</TABLE>
No depreciation is charged on assets under construction.
Investments
Fixed asset investments are included at valuation. Provision is made for
any permanent diminution in value.
Current asset investments are included at the lower of cost and net
realisable value.
Interests in Associated Undertakings
The associated undertaking is an entity in which a consolidated member of
the group has a participating interest and over whose operating and financial
policies it exercises a significant influence. This investment is accounted for
by the net equity method of accounting, whereby the consolidated profit and
loss account includes the appropriate share of this company's profits less
losses (based on audited financial statements made up to the 28th November
1998) and the group's share of post acquisition retained profits and reserves
is added to the cost of investment in the consolidated balance sheet.
Turnover
Turnover represents the total amount receivable by the group for goods
sold and services provided net of V.A.T. Inter-group transactions are
eliminated on consolidation.
14
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
Stocks
Stocks have been valued at the lower of actual cost and net realisable
value.
Deferred Taxation
Provision is made at current rates for taxation deferred in respect of all
material timing differences, except to the extent that in the opinion of the
directors, there is reasonable probability that the liability will not arise in
the foreseeable future.
Leasing and Rental Transactions
Assets held under leasing arrangements that transfer substantially all the
risks and rewards of ownership to the company are capitalised. The capital
element of the related rental obligations is included in creditors. The
interest element of the rental obligations is charged to the profit and loss
account so as to produce a constant periodic rate of charge.
Operating lease and rental transactions are charged to profit and loss
account in the period to which they relate.
Pension Benefits
Pension benefits are funded through defined contribution schemes over the
employees' periods of service. The group's contributions are charged to the
profit and loss account as incurred.
The group also operates a defined benefit scheme for certain of its
employees. The expected costs of providing these pensions, as calculated
periodically by professionally qualified actuaries, is charged to the profit
and loss account so as to spread the cost over the service lives of employees
in the scheme operated within the group in such a way that the pension cost is
a substantially level percentage of current and expected future pensionable
payroll.
Grants
Grants in respect of capital expenditure are credited to a deferred income
account and are released to the profit and loss account by equal annual
instalments over the expected useful life of the relevant assets.
Grants of a revenue nature are credited to the profit and loss account in
the same period as the related expenditure.
Foreign Currencies
Revenues and costs denominated in foreign currencies are recorded at the
rates of exchange ruling at the dates of the transactions; monetary assets and
liabilities at the balance sheet date are translated at year end rates of
exchange. Exchange differences thus arising are reported as part of the profit
for the year.
For the purposes of consolidation, the closing rate method is used under
which translation losses or gains are shown as a movement on reserves. Profit
and loss financial statements of overseas subsidiaries are translated at the
average exchange rate.
Show Productions
Expenditure on show productions is carried forward to be recovered over
the foreseeable life of the show, provided there is reasonable certainty as to
the show's profitability.
15
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
Capitalisation of Interest
Interest costs relating to the financing of major properties in the course
of construction for trading occupation by the group are capitalised.
2. SEGMENT INFORMATION
Contributions to group turnover and profit on ordinary activities before
taxation were as follows:
<TABLE>
<CAPTION>
TURNOVER
-----------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- --------------------
<S> <C> <C>
Theatre services ............................. 52,662,891 71,480,258
Licensed premises (including Hotels) ......... 2,969,428 4,535,459
Bingo ........................................ 2,596,391 2,800,202
Cinemas ...................................... 8,260,666 7,544,144
Health and fitness centres ................... 12,853,557 8,678,384
---------- ----------
79,342,933 95,038,447
========== ==========
<CAPTION>
PROFIT BEFORE
TAXATION
----------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Theatre services ............................. 1,002,841 2,826,049
Licensed premises (including Hotels) ......... 104,714 235,488
Bingo ........................................ 751,000 636,014
Cinemas ...................................... 1,490,373 1,265,536
Health and fitness centres ................... 800,036 168,821
--------- ---------
4,148,964 5,131,908
========= =========
</TABLE>
The appropriate net assets relating to the above segments were as follows:
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Theatre services ............................. 10,724,932 14,106,206
Licensed premises (including Hotels) ......... 1,701,711 1,739,872
Bingo ........................................ 4,572,777 3,400,191
Cinemas ...................................... 9,753,888 8,223,066
Health and fitness centres ................... 928,438 640,398
---------- ----------
27,681,746 28,109,733
========== ==========
</TABLE>
All amounts derive from activities in the United Kingdom and the Republic
of Ireland.
3. OTHER OPERATING INCOME
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
This comprises:
Rent receivable ............................ 674,022 566,527
Other income ............................... 87,004 153,577
Profit on disposal of investments .......... 165,326 --
Profit on disposal of fixed assets ......... -- 79,928
------- -------
926,352 800,032
======= =======
</TABLE>
16
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
4. GROUP OPERATING PROFIT
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
The operating profit is stated after
charging/(crediting):
Directors' emoluments ............................... 2,108,617 2,212,423
Other staff costs ................................... 26,231,075 17,448,421
Auditors' remuneration: Audit ....................... 130,887 120,067
Other services ...................................... 16,635 35,000
Hire of plant & machinery ........................... 911,081 843,162
Other operating lease rentals ....................... 361,738 177,518
Depreciation of tangible fixed assets ............... 4,524,980 4,246,524
Profit on disposal of tangible fixed assets ......... (34,117) (76,412)
---------- ----------
(Profit)/Loss on disposal of investments ............ (86,188) 140,887
========== ==========
</TABLE>
The audit fee for the company for both years has been borne by other group
companies.
5. DIRECTORS' EMOLUMENTS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Salaries ............................. 1,663,384 1,620,333
Benefits in kind ..................... 295,233 434,912
Pension scheme contributions ......... 150,000 157,178
--------- ---------
2,108,617 2,212,423
========= =========
</TABLE>
Retirement benefits were accruing to directors under schemes as follows:
<TABLE>
<CAPTION>
NO. 4 NO. 4
(pounds sterling) (pounds sterling)
Defined Contribution Schemes -------------------- -------------------
<S> <C> <C>
Directors' emoluments disclosed above include
amounts paid to the highest paid director as
follows:
Emoluments ............................................. 762,555 785,714
Contributions to a defined contribution scheme ......... 75,000 62,871
------- -------
837,555 848,585
======= =======
</TABLE>
6. STAFF COSTS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Salaries ...................... 25,951,459 17,518,429
Social security costs ......... 1,896,112 1,660,227
Pension costs ................. 492,121 482,188
---------- ----------
28,339,692 19,660,844
========== ==========
</TABLE>
17
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
6. STAFF COSTS (CONTINUED)
The average monthly number of employees, including directors, during the
year was:
<TABLE>
<CAPTION>
1998 1997
NO. NO.
------- --------
<S> <C> <C>
Theatre services ............................ 1,578 1,916
Licensed premises, including hotels ......... 126 227
Bingo & cinemas ............................. 433 464
Health & fitness centres .................... 659 498
----- -----
2,796 3,105
===== =====
</TABLE>
7. INTEREST PAYABLE
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
On bank loans and overdrafts ......... 2,323,933 2,301,403
On hire purchase loans ............... 44,493 36,339
--------- ---------
2,368,426 2,337,742
========= =========
</TABLE>
All loans are repayable by instalments.
8. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
U.K. Corporation Tax at 31% (1997 -- 32%) ................ 1,315,503 1,598,928
Taxation on share of profit of associated undertaking..... 294,793 132,333
Deferred taxation ........................................ 517,069 532,595
--------- ---------
2,127,365 2,263,856
Adjustments relating to prior years:
Corporation tax ......................................... (191,260) 10,247
Taxation on share of profit of associated
undertaking ............................................ -- 66,667
--------- ---------
1,936,105 2,340,770
========= =========
</TABLE>
The taxation charge for the year is distorted due to the level of
depreciation charged on assets not eligible for capital allowances.
9. DIVIDENDS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Interim dividends paid on equity ordinary shares
(pounds sterling)0.67 per share (1997 -- (pounds sterling)0.49) .. 2,000,000 800,000
========= =======
</TABLE>
In 1997 certain shareholders' waived their entitlement to an interim
dividend.
18
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
10. PROFIT OF THE PARENT COMPANY
The amount of the group profit attributable to Apollo Leisure Group plc.
which has been accounted for within its own financial statements is (pounds
sterling)2,061,429 (1997 -- (pounds sterling)798,334). The company is exempt
from presenting its own profit and loss account in accordance with Section 230
Companies Act 1985.
11. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
LONG SHORT
FREEHOLD LEASEHOLD LEASEHOLD
PROPERTY PROPERTIES PROPERTIES
-------------------- -------------------- --------------------
COST/VALUATION (pounds sterling) (pounds sterling) (pounds sterling)
<S> <C> <C> <C>
At 30th November 1997 .......... 40,050,075 20,323,840 5,231,717
Additions ...................... 34,410 (25,696) (10,892)
Disposals ...................... (216,627) -- --
Exchange Adjustment ............ 62,650 -- --
Reclassifications .............. 4,156,036 (25,622) 1,309,672
---------- ---------- ---------
AT 28TH NOVEMBER 1998 .......... 44,086,544 20,272,522 6,530,497
========== ========== =========
Comprising:
At Cost ........................ 17,119,704 15,620,022 6,095,497
At Valuation: 01.12.90 ......... 8,633,000 -- 435,000
30.11.91 .................. 13,370,996 -- --
27.05.92 .................. -- 4,652,500 --
27.11.93 .................. 4,962,844 -- --
---------- ---------- ---------
44,086,544 20,272,522 6,530,497
========== ========== =========
DEPRECIATION
At 30th November 1997 .......... 5,292,492 931,239 1,546,276
Charge ......................... 874,343 479,211 440,402
Disposals ...................... (44,463) -- --
Exchange Adjustment ............ 8,155 -- --
Reclassifications .............. 43,850 -- (15,082)
---------- ---------- ---------
AT 28TH NOVEMBER 1998 .......... 6,174,377 1,410,450 1,971,596
========== ========== =========
NET BOOK VALUE
At 29th November 1997 .......... 34,757,583 19,392,601 3,685,441
========== ========== =========
AT 28TH NOVEMBER 1998 .......... 37,912,167 18,862,072 4,558,901
========== ========== =========
<CAPTION>
FIXTURES,
FITTINGS ASSETS
& MOTOR UNDER
EQUIPMENT VEHICLES CONSTRUCTION TOTAL
-------------------- -------------------- -------------------- -------------------
COST/VALUATION (pounds sterling) (pounds sterling) (pounds sterling) (pounds sterling)
<S> <C> <C> <C> <C>
At 30th November 1997 .......... 23,552,602 915,029 6,025,390 96,098,653
Additions ...................... 2,822,579 320,262 4,643,496 7,784,159
Disposals ...................... (337,924) (244,714) -- (799,265)
Exchange Adjustment ............ 25,252 366 -- 88,268
Reclassifications .............. 2,576,147 -- (8,016,233) --
---------- -------- ---------- ----------
AT 28TH NOVEMBER 1998 .......... 28,638,656 990,943 2,652,653 103,171,815
========== ======== ========== ===========
Comprising:
At Cost ........................ 28,638,656 990,943 2,652,653 71,117,475
At Valuation: 01.12.90 ......... -- -- -- 9,068,000
30.11.91 .................. -- -- -- 13,370,996
27.05.92 .................. -- -- -- 4,652,500
27.11.93 .................. -- -- -- 4,962,844
---------- -------- ---------- -----------
28,638,656 990,943 2,652,653 103,171,815
========== ======== ========== ===========
DEPRECIATION
At 30th November 1997 .......... 12,563,494 569,146 -- 20,902,647
Charge ......................... 2,476,204 254,820 -- 4,524,980
Disposals ...................... (337,851) (176,747) -- (559,061)
Exchange Adjustment ............ 24,812 358 -- 33,325
Reclassifications .............. (28,768) -- -- --
---------- -------- ---------- -----------
AT 28TH NOVEMBER 1998 .......... 14,697,891 647,577 -- 24,901,891
========== ======== ========== ===========
NET BOOK VALUE
At 29th November 1997 .......... 10,989,108 345,883 6,025,390 75,196,006
========== ======== ========== ===========
AT 28TH NOVEMBER 1998 .......... 13,940,765 343,366 2,652,653 78,269,924
========== ======== ========== ===========
</TABLE>
The total net book value includes (pounds sterling)314,747 (1997 --
(pounds sterling)416,749) in respect of assets held under hire purchase and
finance lease agreements.
The depreciation charge for the year on these assets amounted to (pounds
sterling)131,643 (1997 -- (pounds sterling)167,024).
The cumulative amount of capitalised interest included in the net book
value of fixed assets is (pounds sterling)678,185 (1997 -- (pounds
sterling)693,110). This relates to the interest capitalised during the
construction of the Lyceum Theatre.
19
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
11. TANGIBLE FIXED ASSETS (CONTINUED)
On an historical cost basis, freehold and leasehold properties would have
been included at:
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Cost ............................. 59,368,026 54,064,920
Accumulated depreciation ......... (8,354,358) (6,805,610)
---------- ----------
Net Book Value ................... 51,013,668 47,259,310
========== ==========
</TABLE>
12. FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
GROUP COMPANY
----------------------------------------- ----------------------------------------
1998 1997 1998 1997
(pounds sterling) (pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Subsidiaries (see i) ............... -- -- 28,029,809 28,981,415
Other investments (see ii) ......... 1,816,912 1,522,293 -- --
--------- --------- ---------- ----------
1,816,912 1,522,293 28,029,809 28,981,415
========= ========= ========== ==========
</TABLE>
(I) INVESTMENTS IN SUBSIDIARIES
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
At beginning of year ...................... 28,981,415 32,644,385
Revaluation of investment in Apollo Leisure
(U.K.) Limited & Point Exhibition Company
Limited .................................. (549,606) (3,662,970)
Return of investment in Point Exhibition
Company Limited .......................... (402,000) --
---------- ----------
At end of year ............................ 28,029,809 28,981,415
========== ==========
</TABLE>
The investments in Apollo Leisure (U.K.) Limited and Point Exhibition
Company Limited have been revalued based on underlying net asset value at 28th
November 1998 of (pounds sterling)28,029,809 (1997 -- (pounds
sterling)28,981,361). The historic cost of the investments is (pounds
sterling)1,739,804 (1997 -- (pounds sterling)2,080,175).
The following are the company's principal subsidiaries:
<TABLE>
<CAPTION>
% OF
SHARES CAPITAL & PROFIT
COMPANY NATURE OF BUSINESS HELD RESERVES FOR YEAR
- ---------------------------------- ------------------------------- -------- -------------------- -------------------
(pounds sterling) (pounds sterling)
<S> <C> <C> <C> <C>
Apollo Leisure (U.K.) Ltd. Theatre Hire, Theatrical 100 26,486,258 (262,964)
and its trading subsidiaries Show Production, Sports
& Fitness Management,
Ticket Sales Agencies, Hotels,
Cinemas and Bingo Halls
Barry Clayman Concerts Ltd. Theatrical Show Production 50 (1,281,994) 205,568
and its trading subsidiaries
Point Exhibition Company Ltd. Theatre Hire 50 3,203,574 249,259
========== ========
</TABLE>
20
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
12. FIXED ASSET INVESTMENTS (CONTINUED)
All shares held are ordinary equity shares. The percentage of shares held
also reflects the proportion of voting rights held.
The Point Exhibition Company Limited is incorporated in and operates in
the Republic of Ireland. All other companies were incorporated in and operate
wholly within the United Kingdom.
All subsidiary companies of Apollo Leisure (U.K.) Limited are wholly owned
with the exception of Tickets London Limited, where 66.67% of the equity is
held and CCL Leisure Limited (formerly City Centre Leisure (Holdings) Limited)
where 50.1% of the equity is held.
All subsidiary undertakings have been included in the consolidation.
Acquisitions
In accordance with the Shareholders' Agreement for the acquisition of the
issued share capital of CCL Leisure Limited in 1997 an estimated further
consideration of (pounds sterling)3,183,001 (1997 -- (pounds
sterling)3,112,000) is provided for at the balance sheet date.
This has been revised to reflect the directors' best estimate of the total
amount payable, and payments made during the year.
(II) OTHER INVESTMENTS
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Nederlander Dominion Limited ......... 1,816,912 1,522,293
========= =========
</TABLE>
INVESTMENT IN NEDERLANDER DOMINION LIMITED
<TABLE>
<CAPTION>
SHARE OF INTEREST IN
ASSOCIATED TENANCY
UNDERTAKING IN COMMON TOTAL
-------------------- -------------------- -------------------
(pounds sterling) (pounds sterling) (pounds sterling)
<S> <C> <C> <C>
VALUATION
At 29th November 1997 ..................................... 532,825 989,468 1,522,293
Capital introduced ........................................ -- 50,000 50,000
Distribution received ..................................... (250,000) (83,362) (333,362)
Share of operating profits/rental income .................. 742,282 130,492 872,774
Share of taxation charge (See Note 8) ..................... (294,793) -- (294,793)
-------- ------- ---------
AT 28TH NOVEMBER 1998 ..................................... 730,314 1,086,598 1,816,912
======== ========= =========
COST AT 29TH NOVEMBER 1997 AND 28TH NOVEMBER 1998 ......... 127,900 638,582 766,482
======== ========= =========
</TABLE>
(a) As at 28th November 1998, the group owns 33.33% (1997 -- 33.33%) of the
issued share capital of its associated undertaking, Nederlander Dominion
Limited.
The group's share of the company's net assets is (pounds sterling)696,164.
During the year the group received a dividend of (pounds sterling)250,000
which has been credited to the value of the investment.
21
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
12. FIXED ASSET INVESTMENTS (CONTINUED)
(b) As an integral part of the overall investment, the group holds a 33.33%
interest in the tenancy in common of the Dominion Theatre, London which is
operated by Nederlander Dominion Limited.
The group's share of rental income is included within other operating
income.
During the year the group received a distribution of (pounds
sterling)83,362 which has been credited to the value of the investment.
13. STOCKS
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Consumables .............. 374,898 410,407
Goods for resale ......... 294,955 275,225
------- -------
669,853 685,632
======= =======
</TABLE>
The directors consider that the replacement cost of stock is not
materially different to the balance sheet value.
14. DEBTORS
<TABLE>
<CAPTION>
GROUP COMPANY
----------------------------------------- ----------------------------------------
1998 1997 1998 1997
(pounds sterling) (pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Trade debtors .......................... 6,321,595 6,116,142 -- --
Other debtors .......................... 1,432,692 920,988 1,000 1,000
Prepayments and accrued income ......... 4,371,223 1,711,237 -- --
--------- --------- ----- -----
12,125,510 8,748,367 1,000 1,000
========== ========= ===== =====
</TABLE>
Included within other debtors is an amount of (pounds sterling)282,906
(1997 -- (pounds sterling)Nil) which is repayable after more than one year.
15. CURRENT ASSET INVESTMENTS
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Listed at cost ............. 760,838 1,119,403
Unlisted at cost ........... 415,100 393,334
Provision for loss ......... (268,307) (219,886)
-------- ---------
907,631 1,292,851
======== =========
</TABLE>
The market value of the listed investments at 28th November 1998 was
(pounds sterling)655,274 (1997 -- (pounds sterling)1,076,064).
22
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
GROUP
-----------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- --------------------
<S> <C> <C>
Bank and Mortgage Loans (Note 18) .......... 4,557,718 3,683,198
Bank overdrafts (Note 18) .................. 2,070,370 2,409,668
Hire purchase creditors (Note 18) .......... 222,708 201,463
Trade creditors ............................ 7,723,481 9,131,061
Amounts owed to subsidiaries ............... -- --
Corporation tax ............................ 915,305 1,458,811
Other taxation and social security ......... 2,857,339 3,647,303
Other creditors ............................ 25,585,783 19,107,082
Accruals and deferred income ............... 8,145,767 3,091,329
---------- ----------
52,078,471 42,729,915
========== ==========
<CAPTION>
COMPANY
----------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Bank and Mortgage Loans (Note 18) .......... -- --
Bank overdrafts (Note 18) .................. -- --
Hire purchase creditors (Note 18) .......... -- --
Trade creditors ............................ - --
Amounts owed to subsidiaries ............... 1,598,051 2,000,051
Corporation tax ............................ -- --
Other taxation and social security ......... -- --
Other creditors ............................ -- --
Accruals and deferred income ............... -- --
--------- ---------
1,598,051 2,000,051
========= =========
</TABLE>
Other creditors includes (pounds sterling)482,000 relating to deferred
consideration due on the acquisition of CCL Leisure Limited as referred to in
Note 12(i).
17. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Bank and Mortgage Loans (Note 18) ......... 22,882,976 23,169,903
Hire purchase creditors (Note 18) ......... 61,408 94,953
Other creditors ........................... 2,998,309 3,326,965
---------- ----------
25,942,693 26,591,821
========== ==========
</TABLE>
Other creditors includes (pounds sterling)2,701,001 relating to deferred
consideration due on the acquisition of CCL Leisure Limited as referred to in
Note 12(i).
18. BORROWINGS
The bank overdrafts, loans and mortgage loans are secured by legal charges
over certain of the group's freehold and leasehold properties. The loans bear
interest at up to 1.25 percent above bank base rates.
The hire purchase creditors are secured by the related leased assets.
23
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
18. BORROWINGS (CONTINUED)
The borrowings are repayable by instalments as follows:
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Within one year .................... 6,850,796 6,294,329
Between one and two years .......... 3,797,526 3,269,798
Between two and five years ......... 11,208,354 10,437,381
After five years ................... 7,938,504 9,557,677
---------- ----------
29,795,180 29,559,185
========== ==========
</TABLE>
Those bank and mortgage loans which are repayable in part after more than
five years are repayable by monthly instalments terminating in 2008.
The hire purchase creditors are all repayable within five years.
19. DEFERRED TAXATION
Provision has been made in these financial statements as follows:
Provisions calculated at 31% (1997 -- 32%)
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Accelerated capital allowances ......... 2,249,371 1,728,103
========= =========
At beginning of year ................... 1,728,103 1,238,645
Charged for the year ................... 517,069 532,595
Exchange difference .................... 4,199 (43,137)
--------- ---------
At end of year ......................... 2,249,371 1,728,103
========= =========
</TABLE>
No provision has been made for the potential Corporation Tax liability of
approximately (pounds sterling)1,620,000 (1997 -- (pounds sterling)2,335,000)
which would arise if land and buildings were sold at an amount equal to their
net book values. In the opinion of the directors, no provision is necessary.
There is no other unprovided deferred tax liability in the group or the
company.
20. GRANTS
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
At beginning of year ......................... 1,427,932 1,172,484
Grants received for capital projects ......... 255,635 367,025
Release ...................................... (560,672) (111,577)
--------- ---------
At end of year ............................... 1,122,895 1,427,932
========= =========
</TABLE>
24
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
21. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
GROUP & COMPANY
------------------------------------------
ALLOTTED
AUTHORISED & FULLY PAID
1998 & 1997 1998 & 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Ordinary shares of (pounds sterling)1 each ......... 5,000,000 3,000,000
========= =========
</TABLE>
22. RECONCILIATION OF MOVEMENTS IN GROUP EQUITY SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Profit for the financial year ...................................... 1,964,449 2,450,610
Dividend paid ...................................................... (2,000,000) (800,000)
---------- ---------
(35,551) 1,650,610
Goodwill written off ............................................... (220,997) (3,288,766)
Other recognised gains & losses relating to the year (net) ......... (18,065) (217,091)
---------- ----------
Net increase/(decrease) to shareholders' funds ..................... (274,613) (1,855,247)
Opening equity shareholders' funds ................................. 26,466,750 28,321,997
---------- ----------
Closing equity shareholders' funds ................................. 26,192,137 26,466,750
========== ==========
</TABLE>
23. RESERVES
Of the total reserves shown in the balance sheet, the following amounts
are considered distributable or otherwise:
<TABLE>
<CAPTION>
GROUP COMPANY
----------------------------------------- ----------------------------------------
1998 1997 1998 1997
(pounds sterling) (pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
DISTRIBUTABLE:
Profit & loss account ........................ 12,928,021 12,879,767 92,826 31,397
NON-DISTRIBUTABLE:
Revaluation reserve .......................... 8,592,671 8,839,957 23,340,005 23,951,040
Foreign currency translation reserve ......... (246,392) (275,920) -- --
Other reserves ............................... 1,917,837 2,022,946 -- --
---------- ---------- ---------- ----------
Total Reserves ............................... 23,192,137 23,466,750 23,432,831 23,982,437
========== ========== ========== ==========
</TABLE>
25
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
23. RESERVES (CONTINUED)
Group
<TABLE>
<CAPTION>
PROFIT
& LOSS REVALUATION
ACCOUNT RESERVE
-------------------- --------------------
(pounds sterling) (pounds sterling)
<S> <C> <C>
At beginning of year ......................... 12,879,767 8,839,957
Retained loss for the financial year ......... (35,551) --
Goodwill written off ......................... (220,997) --
Transfer of realised profits ................. 324,545 (219,436)
Revaluations in the year ..................... -- (31,419)
Currency translation differences on
foreign currency net investments ............ (19,743) (5,988)
Minority interest ............................ -- 9,557
---------- ---------
At end of year ............................... 12,928,021 8,592,671
========== =========
<CAPTION>
FOREIGN
CURRENCY
TRANSLATION OTHER
RESERVE RESERVES TOTAL
-------------------- -------------------- -------------------
(pounds sterling) (pounds sterling) (pounds sterling)
<S> <C> <C> <C>
At beginning of year ......................... (275,920) 2,022,946 23,466,750
Retained loss for the financial year ......... -- -- (35,551)
Goodwill written off ......................... -- -- (220,997)
Transfer of realised profits ................. -- (105,109) --
Revaluations in the year ..................... -- -- (31,419)
Currency translation differences on
foreign currency net investments ............ 36,313 -- 10,582
Minority interest ............................ (6,785) -- 2,772
-------- --------- ----------
At end of year ............................... (246,392) 1,917,837 23,192,137
======== ========= ==========
</TABLE>
Other reserves relate to discounts on the acquisition of subsidiaries
(negative goodwill). An amount of (pounds sterling)105,109 has been
transferred to the profit and loss account during the year in respect of the
disposal of properties on which a discount on acquisition had arisen.
Company
<TABLE>
<CAPTION>
PROFIT & REVALUATION
LOSS ACCOUNT RESERVE TOTAL
-------------------- -------------------- -------------------
(pounds sterling) (pounds sterling) (pounds sterling)
<S> <C> <C> <C>
At beginning of year ..................................... 31,397 23,951,040 23,982,437
Retained profit for the financial year ................... 61,429 -- 61,429
Decrease on revaluation of investment in subsidiaries..... -- (611,035) (611,035)
------ ---------- ----------
At end of year ........................................... 92,826 23,340,005 23,432,831
====== ========== ==========
</TABLE>
24. NON-EQUITY MINORITY INTERESTS
Non-equity minority interests comprise 7% redeemable cumulative preference
shares of IR (pounds sterling)1 each in The Point Exhibition Company Limited.
The shares are redeemable on 31st March 2004.
26
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
25. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATION
ACTIVITIES
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Operating profit .................................. 5,003,655 6,643,025
Depreciation charges .............................. 4,524,980 4,246,524
Profit on sale of tangible fixed assets ........... (34,117) (76,412)
Decrease/(Increase) in stocks ..................... 16,216 (21,207)
(Increase)/Decrease in debtors .................... (2,665,002) 1,185,745
Increase/(Decrease) in creditors .................. 9,312,273 (4,565,071)
Grants amortised .................................. (560,672) (111,577)
(Profit)/Loss on sale of investments .............. (86,188) 350,407
Movements in investments in productions ........... (868,896) (442,550)
---------- ----------
Net Cash Inflow From Operating Activities ......... 14,642,249 7,208,880
========== ==========
</TABLE>
26. GROSS CASH FLOWS
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
RETURNS ON INVESTMENT AND SERVICING OF FINANCE ----------------- -----------------
<S> <C> <C>
Interest received ..................................................... 288,607 454,958
Interest paid ......................................................... (2,162,528) (2,290,854)
Interest element of finance lease rentals ............................. (44,493) (36,340)
Non-equity dividends paid ............................................. -- (77,869)
----------- -----------
(1,918,414) (1,950,105)
=========== ===========
1998 1997
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (pounds sterling) (pounds sterling)
----------------- -----------------
Purchase of tangible fixed assets ..................................... (7,534,159) (10,615,846)
Proceeds from sale of tangible fixed assets ........................... 757,167 2,216,543
----------- -----------
(6,776,992) (8,399,303)
=========== ===========
1998 1997
ACQUISITIONS (pounds sterling) (pounds sterling)
----------------- -----------------
Acquisition of subsidiary, net of cash acquired (see Note 12) ......... -- (178,645)
Purchase of minority interests ........................................ (421,155) --
----------- -----------
(421,155) (178,645)
=========== ===========
</TABLE>
27
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
27. MANAGEMENT OF LIQUID RESOURCES
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Purchase of investments .................................... (604,877) (1,150,356)
Proceeds from sale of investments .......................... 1,049,630 484,885
Net cash withdrawn from/(invested in) money market ......... 978,789 3,542,907
--------- ----------
1,423,542 2,877,436
========= ==========
</TABLE>
28. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR
<TABLE>
<CAPTION>
LEASE
FINANCE LOANS TOTAL
(pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------
<S> <C> <C> <C>
At beginning of year
In creditors due within one year ......... 201,463 3,683,198 3,884,661
In creditors due after one year .......... 94,953 23,534,868 23,629,821
------- ---------- ----------
296,416 27,218,066 27,514,482
Exchange adjustment ...................... 99 71,002 71,101
Non Cash flow items:
New finance leases ....................... 250,000 -- 250,000
Cash flow items:
Repayments of loans/leases ............... (262,399) (3,533,486) (3,795,885)
New loans ................................ -- 3,685,112 3,685,112
-------- ---------- ----------
At end of year ........................... 284,116 27,440,694 27,724,810
======== ========== ==========
In creditors due within one year ......... 222,708 4,557,718 4,780,426
In creditors due after one year .......... 61,408 22,882,976 22,944,384
-------- ---------- ----------
284,116 27,440,694 27,724,810
======== ========== ==========
</TABLE>
29. ANALYSIS OF THE CASH BALANCES
<TABLE>
<CAPTION>
EXCHANGE CASH
1998 1997 DIFFERENCE FLOW
(pounds sterling) (pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Cash at bank and in hand ......... 15,285,346 13,142,355 30,148 2,112,843
Less liquid resources ............ (9,181,050) (10,159,839) -- 978,789
---------- ----------- ------ ---------
6,104,296 2,982,516 30,148 3,091,632
Bank overdraft ................... (2,070,370) (2,409,668) 1,150 (338,148)
---------- ----------- ------ ---------
4,033,926 572,848 31,298 3,429,780
========== =========== ====== =========
</TABLE>
28
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
30. ANALYSIS OF CHANGES IN NET DEBT
<TABLE>
<CAPTION>
CASH
1997 FLOW
(pounds sterling) (pounds sterling)
-------------------- --------------------
<S> <C> <C>
Cash in hand & at bank (excluding
liquid resources) ................ 2,982,516 3,091,632
Overdrafts ........................ (2,409,668) 338,148
---------
3,429,780
=========
Debt due within one year .......... (3,683,198) (151,626)
Debt due after one year ........... (23,534,868) --
Hire purchase liabilities ......... (296,416) 262,399
---------
110,773
=========
Current asset investments ......... 1,292,851 (444,753)
Liquid resources .................. 10,159,839 (978,789)
---------
(1,423,542)
==========
Total ............................. (15,488,944) 2,117,011
=========== ==========
<CAPTION>
OTHER
EXCHANGE NON-CASH
MOVEMENT CHANGES 1998
(pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Cash in hand & at bank (excluding
liquid resources) ................ 30,148 6,104,296
Overdrafts ........................ 1,150 (2,070,370)
Debt due within one year .......... (71,002) (651,892) (4,557,718)
Debt due after one year ........... -- 651,892 (22,882,976)
Hire purchase liabilities ......... (99) (250,000) (284,116)
Current asset investments ......... -- 59,533 907,631
Liquid resources .................. -- -- 9,181,050
Total ............................. (39,803) (190,467) (13,602,203)
======= ======== ===========
</TABLE>
31. CAPITAL COMMITMENTS
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Contracted for but not provided ......... 7,315,000 3,930,000
========= =========
</TABLE>
External funding for the developments is already in place.
32. FINANCIAL COMMITMENTS
At 28th November 1998, the group had, in respect of land and buildings,
operating lease commitments under non cancellable operating leases as follows:
<TABLE>
<CAPTION>
GROUP
------------------------------------------
1998 1997
(pounds sterling) (pounds sterling)
-------------------- -------------------
<S> <C> <C>
Leases expiring:
Within one year .................... 44,854 69,750
Between one and five years ......... 82,370 59,346
Over five years .................... 190,699 162,000
------- -------
317,923 291,096
======= =======
</TABLE>
33. PENSION SCHEMES
Defined Contribution Schemes
The group operates defined contribution pension schemes for the benefit of
directors and senior employees. The assets of the schemes are administered by
trustees in funds independent from those of the group.
29
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONTINUED)
33. PENSION SCHEMES (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
(pounds sterling) (pounds sterling)
The total contributions charged in the year amounted to: -------------------- -------------------
<S> <C> <C>
Directors ................................................ 150,000 157,178
Staff .................................................... 289,336 260,942
------- -------
439,336 418,120
======= =======
</TABLE>
At the balance sheet date, there were no outstanding contributions.
Defined Benefits Scheme
The group also operates a pension scheme providing benefits based on final
pensionable pay for certain of its employees. The assets of the scheme are held
separately from those of the company, being invested with an insurance company.
Contributions to the scheme are charged to the profit and loss account so as to
spread the cost of pensions over employees' working lives with the group. The
contributions are determined by a qualified actuary on the basis of triennial
valuations using the projected unit method. The most recent valuation was at
1st April 1997.
The assumptions which have the most significant effect on the results of
the valuation are those relating to the rate of return on investments and the
rates of increases in salaries and pensions. It was assumed that the investment
returns would be 8% per annum, that salary increases would average 6% per annum
and that present and future pensions would increase at the rate of 6% per
annum.
The pension charge for the year was (pounds sterling)52,785 (1997 --
(pounds sterling)64,068). At the balance sheet date, outstanding contributions
amounted to (pounds sterling)Nil (1997 -- (pounds sterling)7,918).
The most recent actuarial valuation showed that the market value of the
scheme's assets was (pounds sterling)65,000 representing a funding level of
127%. The contributions of the company and employees will remain at 17% and 6%
of earnings respectively.
34. TRANSACTIONS WITH RELATED PARTIES
In the opinion of the directors the following transactions require to be
disclosed under the definition of related parties within Financial Reporting
Standard Number 8 "Related Party Disclosures".
1) During the year, interest free loans were advanced to directors of the
company as detailed below:
<TABLE>
<CAPTION>
OUTSTANDING OUTSTANDING MAXIMUM
AT BEGINNING AT END OF OUTSTANDING
OF THE YEAR THE YEAR DURING THE YEAR
(pounds sterling) (pounds sterling) (pounds sterling)
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Mr. P.R. Gregg .......... -- -- 75,594
Mrs. A.K. Gregg ......... 32,237 -- 32,237
====== == ======
</TABLE>
2) A short leasehold property used for office accommodation is leased
from a member of Mr. P.R. Gregg's family at an annual rental of (pounds
sterling)48,718.
3) The group is a tenant of Apollo Leisure Group Pension Scheme of whom
Messrs. P.R. Gregg, D.C. Rogers and S.J. Shrouder are trustees and
beneficiaries. The group pays rent of (pounds sterling)86,500 per annum to the
scheme. There were no balances outstanding at the 28th November 1998.
4) Nederlander Dominion Limited, a 33.33% associated undertaking of the
company, paid a management fee of (pounds sterling)59,952 for accountancy and
administrative services. There were no balances outstanding as at the 28th
November 1998.
30
<PAGE>
APOLLO LEISURE GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28TH NOVEMBER 1998 -- (CONCLUDED)
34. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
5) Barry Clayman Concerts Limited, a 50% subsidiary of Apollo Leisure
Group plc., produces and promotes shows at the company's theatres. The total
paid to the company for theatre hire and theatre services amounted to
approximately (pounds sterling)729,074. The balances owing to Barry Clayman
Concerts Limited in respect of future shows including advanced ticket sales is
approximately (pounds sterling)570,897 as at the 28th November 1998.
With the exception of the transactions detailed in note 1, all
transactions have been carried out on normal commercial terms.
35. CONTROLLING PARTY
In the opinion of the directors, the group is controlled jointly by Mr.
and Mrs. Gregg who own 67% of the issued ordinary share capital.
31
